Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

BRITISH FILM INSTITUTE SOUTHBANK BILL

Lords amendments agreed to.

Oral Answers to Questions — ENERGY

Offshore Energy Industry

Mr. Donald Thompson: To ask the Secretary of State for Energy what has been the level of employment in the offshore oil and gas industry in each of the years from 1983 to 1989.

The Minister of State, Department of Energy (Mr. Peter Morrison): Employment in the offshore oil and gas industry has ranged from 31,300 to 22,300 during the past seven years. It is currently over 30,700—the highest level since 1984.

Mr. Thompson: While thanking my right hon. Friend for that reply, may I remind him of not only offshore investment, but inshore investment in the oil industry—in valves, heavy engineering equipment and highly technological equipment, in which British engineers lead the world? Will he do all he can to encourage inshore investment, as well as offshore investment?

Mr. Morrison: My hon. Friend is right. Literally tens of thousands of people are employed onshore in the services and capital goods industries. I am delighted that the numbers employed onshore have increased substantially in the past year.

Mr. Salmond: Will the Minister explain why his Department today issued such a pathetically weak response to the report of the Select Committee on Energy on Britoil and BP job losses and assets sales? Why was not his Department able at least to agree with the Select Committee that to sack 1,000 people a mere 18 months after apparently promising them job security represented a substantial breach of the spirit of that assurance? Has not the Department of Energy, under Tory control, once again demonstrated that it is not fit to police oil companies independently in the North sea and has no intention of protecting Scottish interests?

Mr. Morrison: The hon. Member will understand that it was not a weak response in any sense. It responded to the points that he and others made in the Select Committee report, which we welcomed and, by and large, agreed with. Unlike him, I am no interventionist.

Mr. Moss: Now that offshore employment is at its highest level for six years, thanks to the massive investment in the United Kingdom continental shelf, does my right hon. Friend agree that that is good news for jobs in Scotland?

Mr. Morrison: It is certainly good news for jobs in Scotland. My hon. Friend points out what some Opposition Members apparently do not want as much as we do.

Greenpeace

Mr. Fearn: To ask the Secretary of State for Energy when he last met representatives of Greenpeace; and what matters were discussed.

The Parliamentary Under-Secretary of State for Energy (Mr. Tony Baldry): My right hon. Friend and I have not met Greenpeace.

Mr. Fearn: Does the Minister agree that, in that case, more regular meetings are needed with Greenpeace and that, at those metings, the decommissioning of nuclear plants should be discussed, especially those of Sellafield and Springfield which discharge into the River Ribble and the coastline of my constituency at Southport? Does he also agree that the three-mile safety limit should be extended to 15 miles around the nuclear power stations where 3 million people live?

Mr. Baldry: I am always happy to meet Greenpeace and any other organisations to discuss matters of energy policy. We have made our intentions on nuclear policy perfectly clear. There will be a full review of nuclear policy in 1994. We all look forward with interest to discovering the energy policies of the party that the hon. Gentleman represents. There seems to be some confusion between those in his party who were once members of the alliance.

Dr. Michael Clark: Will my hon. Friend confirm that he shares Greenpeace's concern for the environment? When he meets Greenpeace, will he find out whether it will acknowledge the cost of the measures it advocates and recognise that those costs have to be passed on to the consumer?

Mr. Baldry: Yes, my hon. Friend makes a telling point. The comparison does not involve merely economic costs but environmental costs. One of the concerns, which I suspect Greenpeace and many of us have, is what to do about sulphur emissions. As my right hon. Friend the Prime Minister said in an excellent speech to the Royal Society last week, the Government, as part of their policy, are fitting flue gas desulphurisation equipment at the most modern of our coal-fired power stations, Drax in Yorkshire, at a cost of about £600 million for one single site. My right hon. Friend said:
retrofitting desulphurisation equipment is not the only way to achieve reductions. Indeed it can create wider environmental damage because it involves mining limestone (sometimes from some of the most beautiful areas of our countryside), the disposing of gypsum waste, and adding something to carbon dioxide emissions and thus to the greenhouse effect. As so often, solving one problem can create or exacerbate others.
Those costs must be taken into account when determining the best way forward.

Mr. Barron: Can the Minister explain the present position, because he appears to be switching the arguments weekly? Can he tell us why the Government have allowed the two new generators to slide backwards on the £2 billion programme to fit flue gas desulphurisation equipment to 12,000 GW of electricity generation capacity?
Is not it the case that the Prime Minister's words of last November—and what Ministers said throughout last year— have now been turned on their head? While Drax is going ahead, the Government have allowed National Power and PowerGen to forgo the rest of the capacity on the basis that the importation of low-sulphur coal, which at best could cut emissions by 50 per cent., is the correct policy to pursue in preference to retrofitting FGD, which would cut emissions by 90 per cent. In its press release on that subject, Greenpeace stated that if the Government allow the new generators to do that, we will rightly be called the dirty man of Europe. How will the Government meet those targets in view of their ratting on last year's agreements?

Mr. Baldry: The Government are committed to meeting the European Community large plant combustion directive in full and we will do that. I commend the attention of the hon. Gentleman to the most recent edition of the magazine "Power in Europe", which I suspect he reads with interest. It states:
In Brussels, European Community officials say the decision does not place the United Kingdom in contravention of Community environmental rules. 'We're concerned with the amount of sulphur in the air and not with how it does —or does not—get there,' said a source close to the European Community Commissioner for the Environment.
The hon. Gentleman can rest assured that we will meet the European Community large plant combustion directive in full.

Mr. Aitken: If my hon. Friend would like to keep one step ahead of Greenpeace, would he raise as a matter of urgency the fear expressed about the safety of French nuclear installations? Is he aware that there is a real fear among my constituents who live along the channel coast of a French Chernobyl, because the inspector of French nuclear safety has published a most damning report which states that, within the next 20 years, there is a one in 20 chance of a major nuclear accident in some of France's unsatisfactory nuclear stations, 14 of which are within 30 miles of the English coast? Will he raise that as a matter of urgency?

Mr. Baldry: If those reports are continuing to cause concern to my hon. Friend and others who have constituencies near his, I will ensure that they have a full explanation of the situation.

Electricity Imports

Mr. Eadie: To ask the Secretary of State for Energy what is the current estimate, coal equivalent, of electricity that will be imported from France in 1990; and how much has been imported since the first months of 1990.

Mr. Baldry: Future imports and exports of electricity will largely depend on commercial decisions by Electricitéde France and on market conditions in England and Wales. I understand that there were virtually no imports in January and February.

Mr. Eadie: Further to the Minister's answer, does he agree that it is a foolish policy for the Government to depend on energy supplies for this country from a foreign source? If we are so full of the idea that we should have electricity by cable or wire, why do not the Government pursue a policy of using the existing connector between Scotland and England, which has a capacity equivalent to 1·5 million tonnes of coal and, if strengthened, would have a capacity of 3 million tonnes? Why does not the Minister pursue that, as a more sensible energy policy?

Mr. Baldry: Electricité de France will provide an important source of competition in the United Kingdom electricity market. However, so will Scotland. I understand that, just as there are discussions between the area boards and the French, so too are there discussions between the area boards and the Scottish boards for the import of electricity from Scotland into England and Wales.

Mr. Hannam: My hon. Friend has underlined the importance of our nuclear industry. What preparations are being made for the vesting of our nuclear stations in Nuclear Electric plc?

Mr. Baldry: I am glad to be able to tell the House that full drafts of Nuclear Electric's licences have been prepared, and my right hon. Friend the Secretary of State will place copies of them in the Vote Office and in the Library this afternoon.

Mr. Molyneaux: Given the feasibility of the linkage with France, is there any real technical difficulty in providing a similar link between Scotland and Northern Ireland?

Mr. Baldry: I am happy to look at that matter and hear the right hon. Gentleman's views on it in greater detail.

Sir Trevor Skeet: Does the Minister agree that section 32 of the Electricity Act 1989 provides for electricity from France to be part of the non-fossil fuel quota? Does my hon. Friend agree also that, when electricity from France is available, it will be the cheapest in Europe? Does he agree further that, in future, it might be an excellent idea to build a second line across, carrying 2,000 MW?

Mr. Baldry: The arrangement for French electricity will be outside the non-fossil fuel obligation. However, sales of French imports will not have to pay the levy. Clearly, with electricity supplies to and from Scotland and to and from France, we are anxious to ensure the greatest possible competition for the electricity industry in this country, which must be of benefit to the consumer.

Coal Contracts

Mr. Haynes: To ask the Secretary of State for Energy whether he will make it his policy to publish his exchange of correspondence with the member of the European Commission responsible for competition policy regarding the coal contracts agreed between British Coal and National Power and PowerGen.

The Secretary of State for Energy (Mr. John Wakeham): It has been the policy of successive Governments to treat correspondence with the Commission as confidential.

Mr. Haynes: What is the Secretary of State doing swanning around in Europe, fixing up contracts for imports of foreign coal, when he stood at the Dispatch Box and promised miners in this country a fair deal? The miners of Nottinghamshire will not be very pleased with him; nor will the pensioner nor the consumer. Let us have the Secretary of State at the Dispatch Box and let us have the information that we require about what he has been doing.

Mr. Wakeham: The hon. Gentleman is wrong if he thinks that I have been swanning round Europe fixing up coal contracts. Rather the opposite: I have been to Brussels on two occasions to obtain appropriate clearance for the contracts that have been negotiated between British Coal and the generators. I am pleased to inform the House that I do not see any difficulties in that clearance. The size of British Coal's market in the United Kingdom will be limited only by its capacity to supply coal of the required quality and price.

Mr. Knapman: But does not my right hon. Friend agree that, when the electricity supply industry is privatised, it will at long last be in the interests of the generators to buy cheap rather than dearer coal?

Mr. Wakeham: It has always been in the interests of generators to buy cheap coal, but they must buy cheap coal that is of the appropriate quality. British Coal is in the best position to supply the bulk of the requirements for British generators.

Gas and Electricity Prices

Mr. McFall: To ask the Secretary of State for Energy whether he has made an estimate of the effect that announced changes in domestic gas and electricity prices in April 1990 will have on the retail prices index.

Mr. Wakeham: It is estimated that the changes in gas and electricity prices will add about 0·4 per cent. to the retail prices index once the tariffs have been fully implemented.

Mr. McFall: How does the Secretary of State's recent decision to allow electricity prices to rise by more than the rate of inflation square with the Government's long-playing record, which we hear every Tuesday and Thursday at 3.15 pm, by the female lead singer of the "Mid-Staffs Blues Band", called "Bearing Down on Inflation"?

Mr. Wakeham: I enjoyed the hon. Gentleman's well-rehearsed supplementary question. The increase in the price of electricity which has recently been announced means that, on average, all prices will be increased by less than 6 per cent., which is less than the rate of inflation. Average domestic prices will rise by about 9 per cent., and, on average, customers over 1 MW will get a reduction in price.

Mr. John Marshall: Will my right hon. Friend confirm that, since privatisation, the real price of gas to the consumer has fallen and that during the last five years of the Labour Government the price of electricity rose by 155 per cent? Does my right hon. Friend agree that that suggests that privatisation rather than nationalisation is the key to consumer satisfaction?

Mr. Wakeham: My hon. Friend is absolutely right. Under this Government, prices have fallen, whereas they rose substantially under the last Government.

Mr. Morgan: Nevertheless, does the Secretary of State agree that the price rises that will take effect from next week have emerged as the most extraordinary unprotected rip-off ever to face the British consumer? Will the right hon. Gentleman comment on the letter that I received last weekend from Professor Stephen Littlechild, the regulator of the industry, who stated:
I shall have no power to suspend the recent price increases or to impose temporary price increases at a different level."?
As the price increases that have been announced cannot be commented on by the old electricity consumer consultative councils, which can comment only on this year's prices and which will go out of action on 31 March, and nor can they be commented on by the new statutory electricity consumer committees, will the right hon. Gentleman confirm that nobody can comment on those price increases except himself, the Secretary of State? Does the right hon. Gentleman agree that, in effect, the electricity consumer is being shipwrecked while both lifeboats have been hidden in the boat shed and he has hidden the key?

Mr. Wakeham: That is not correct. There is nothing that I can do to stop anybody commenting on the price of electricity. If I wanted to do something about it, I should not be able to achieve it. Although the price increase for domestic consumers is slightly above the rate of inflation this year, it will be followed by two years of price stability, which is good for the consumer.

Nottinghamshire Coalfield

Mr. Andy Stewart: To ask the Secretary of State for Energy what has been the rate of productivity growth in the Nottinghamshire coalfield.

Mr. Baldry: Productivity in the Nottinghamshire coalfield rose from 2·9 tonnes per manshift in 1985–86 to 4·64 tonnes in the first 11 months of 1989–90, an increase of 60 per cent.

Mr. Stewart: The Nottinghamshire mineworkers' productivity record is second to none. Never a week passes without one or another colliery breaking a previous record. All that is due to the skilful negotiations of the Union of Democratic Mineworkers, which has not only increased take-home pay for all miners, but secured the future of the British coal industry into the next century. Therefore, will my hon. Friend accept from me an invitation for our right hon. Friend the Secretary of State for Energy to visit Nottinghamshire and to thank our miners personally?

Mr. Baldry: My hon. Friend is absolutely right. However, it must be noted that output per man shift has to increase by 10 per cent. across the country if British Coal is to become profitable. From what I have seen of the Nottinghamshire coalfield, I am confident of the spirit and the will, and the skills and the co-operation of the UDM work force there to achieve increases such as my hon. Friend has identified. I know that my right hon. Friend hopes to visit Nottinghamshire, as soon as that can be arranged, to thank the Nottinghamshire work force for what it has achieved.

Mr. Lofthouse: When the right hon. Gentleman visits Nottingham, will he also tell the UDM and the miners the number of pits that will close over the next five years as a result of the Government's policy and the number that will close because of the new 20 per cent. non-fossil fuel obligation on the electricity generating industry? No witness who has recently given evidence to the Select Committee on Energy has been able to give an estimate of the true cost of nuclear fuel, so can the Minister give us the true cost this afternoon?

Mr. Baldry: One depressing thing about having energy questions on a Monday is having to face the serried ranks of the Jeremiahs on the Opposition Benches. I draw to the hon. Gentleman's attention the recent statement by the chairman of British Coal, that he does not agree with such gloomy forecasts and that British Coal is determined to ensure that it remains
the supplier-of-choice to the new generators".
The chairman recently described the new contracts as
a firm rebuff for the Jeremiahs and their gloomy forecasts for the future of the coal industry.
He emphasised that
scare stories of a further massive contraction of the industry have been seriously over-stated.

I am sorry to note that the hon. Gentleman is among the Jeremiahs who wish to do down that industry.

Mr. Ian Bruce: Does my hon. Friend agree that we need the productivity from all the other miners to keep up with that of the Nottinghamshire miners, so that the CEGB and its successors can be kept to the commitment to keep electricity prices down, because coal prices will be set at a steady rate? Might not we then be able to export electricity to France and use British coal in so doing?

Mr. Baldry: The Government have demonstrated their commitment to our coal industry, not least by the passing last week of the Coal Industry Act, which gives British Coal between £5 billion and £7 billion of taxpayers' money to help to clear its overhang of past debts. We wish to see a competitive and profitable coal industry, and that will require all the technology, investment and skills of those working in the coal industry. They have those skills, and with them can achieve further productivity gains.

Mr. Dobson: If what the Minister says about improved productivity in the Nottinghamshire coalfield is true, why are the Government proposing to stab the Nottinghamshire miners in the back by pushing for the Associated British Ports coal-importing installation at Immingham and supporting both PowerGen and National Power in building not one but two gas-fired power stations at Killingholme, so that even The Daily Telegraph says that, if these imports of coal continue, they will spell the end of the Nottinghamshire coalfield? Is not that a poor way to reward this increased productivity?

Mr. Baldry: I find it difficult to see as a stab in the back the £2 million every working day that the Government have invested in the coal industry and the between £5 billion and £7 billion that the Government gave to the coal industry at only the end of the last financial year towards its overhang and clearing past debts. It may have escaped the attention of the hon. Gentleman that British Coal has succeeded in securing with the generators coal contracts that will guarantee a stable market and income stream over the next three years.

Renewable Energy

Mr. Maples: To ask the Secretary of State for Energy what initiatives his Department is taking to develop commercially viable and environmentally acceptable forms of renewable technology.

Mr. Peter Morrison: The Government are supporting a major research and development programme aimed at developing commercially viable and environmentally acceptable renewable energy technologies to contribute to future energy supply.

Mr. Maples: How many such projects are there and to what extent are private sector companies involved in them?

Mr. Morrison: There are some 300 or so such projects. We hope to see another 60 or 70 come on stream this year. They are very much joint ventures between the public and private sectors.

Mr. Pike: Does the Minister recognise that, with the privatisation of gas and electricity, measures on renewable sources of energy and environmentally positive moves will


always come second to the profit motive and market forces? If we are to have positive moves in such a direction, will the Government do much more?

Mr. Morrison: I remind the hon. Gentleman of the non-fossil fuel obligation. We have had 339 applications under that obligation, which are to be reviewed; that shows that, with the privatisation of electricity, renewables will be encouraged.

Mr. Barry Field: What reassurance can my right hon. Friend give that our beautiful coastline will not be littered with great big windmill generators under this programme? Having recently refused to endorse such a programme for Tennyson Down, I should not like to see my right hon. Friend become a modern-day Don Quixote.

Mr. Morrison: That is a blandishment which I find it difficult to resist. The normal planning application procedure will apply, but my hon. Friend makes a fair and reasonable point.

Nuclear Fusion

Mr. Geraint Howells: To ask the Secretary of State for Energy if he will make a statement on the possible future application of nuclear fusion technology.

Mr. Baldry: If successfully developed, fusion would he a new source of electric power. It is too soon to speculate about its prospects.

Mr. Howells: Does the Minister agree that the development of nuclear fusion technology could bring many benefits to the people if pursued with urgency by the Government?

Mr. Baldry: It is important to make it clear that the Government already spend about £27 million a year on fusion research with the United Kingdom Atomic Energy Authority, and a further £28 million, through the European Commission, on the Euratom fusion programme.

Mr. Nicholas Bennett: Will my hon. Friend confirm that there is no truth in the story put out two weeks ago by the hon. Member for Holborn and St. Pancras (Mr. Dobson) that a nuclear power station will be built at Pembroke?

Mr. Baldry: The four successor companies have been allocated the properties they need for operational reasons. Other properties, such as that at Pembroke, which are not required for current operations, have been divided up to ensure an equitable distribution of assets among the companies. Nuclear Electric has no development plans for Pembroke. The house knows that we have decided that no new stations should be built anywhere by Nuclear Electric until a complete review of nuclear power has been carried out in 1994.

Mr. Wigley: How much money has been spent on fusion technology since the days of Zeta back in the 1950s? Does the Minister accept that it will be the year 2025 at least before benefits come from this technology, and that the millions of pounds that have been spent on research would have been much better spent on alternative technology, which could now be bringing real benefits?

Mr. Baldry: It is important to get these matters into context. A proper balance has to be struck, and I believe

that the Government have arrived at that balance. Even if fusion were shown to be economic and reliable, it is unlikely that a commercial fusion reactor could be running before the middle of the next century.

Mr. Butler: Does my hon. Friend accept the advice of the leader of the Social and Liberal Democrats that the nuclear industry should be wound up?

Mr. Baldry: As I said in response to the hon. Member for Southport (Mr. Fearn), I am completely confused—as I suspect many hon. Members are—about the nuclear energy policies of the SLD and its associates in this place. I would welcome their making clear to the House exactly what their policies are for nuclear energy.

Mr. Dobson: Will the Minister tell the hon. Member for Pembroke (Mr. Bennett) that he should not be too swift in ruling out a nuclear power station at Pembroke? I received a letter from the Secretary of State today stating that Nuclear Electric intends to keep the land at Pembroke until the review of nuclear policy is completed. It would not do that if it were not contemplating building it there.

Mr. Baldry: As I have made clear, Nuclear Electric has no development plans for Pembroke. We have decided that no new station can be built anywhere by the company until a review has been completed in 1994, and that is how matters stand.

Offshore Energy Industry

Mr. Gerald Bowden: To ask the Secretary of State for Energy how many of the wells drilled on the United Kingdom continental shelf have been drilled (a) since 1964 and (b) since 1979.

Mr. Peter Morrison: Up to 12 February this year a total of 4,190 exploration, appraisal and development wells had been drilled on the United Kingdom continental shelf since 1964, of which 2,886 had been drilled since the beginning of 1979.

Mr. Bowden: I thank my right hon. Friend for supplying those figures, which demonstrate the success of the Government's energy policy and the climate that has been created for investment and enterprise with these drillings. Do the drillings show that there has been an overall increase in the resources available beyond that which was expected and estimated earlier?

Mr. Morrison: Due to the considerable number of discoveries made last year, the remaining reserves recoverable—proven plus probable—will have increased by about 10 million tonnes to 1,200 million tonnes.

Mr. Doran: Despite what the Minister said and the bright prospects for the North sea, will he confirm what last year's Brown Book figures show—that we are still producing more oil than we are finding in the North sea and that our reserves are depleting rapidly?

Mr. Morrison: I think that I would be right in saying that last year we produced a little less than we discovered. The figures will be announced formally in the Brown Book, which will be published in April.

Gas Tariffs

Mr. Rost: To ask the Secretary of State for Energy when he next expects to meet the Director General of Ofgas to discuss British Gas tariffs.

Mr. Peter Morrison: My right hon. Friend and I meet the Director General of Gas Supply from time to time to discuss a range of issues of mutual interest.

Mr. Rost: I congratulate British Gas on its more competitive tariffs for industrial and commercial consumers in response to complaints from them. Will my right hon. Friend discuss with Ofgas the remaining serious problem for users of fewer than 25,000 therms? There is an incentive to waste gas because it benefits a user burning 22,000 therms to burn 25,000 or more as he would then pay less. Is not that a breach of the Gas Act 1986 and the licence? Should not there be a smoother banding and a lower threshold so that that ridiculous anomaly can be ended?

Mr. Morrison: I do not believe that it is a breach of the Gas Act. We have discussed the matter with the Director General of Ofgas who is having further discussions with British Gas. My hon. Friend's point is perfectly fair.

Mr. Jessel: Should not British Gas be warmly commended for its sponsorship of the arts, such as the concert at Hampton Court palace last September for charity—which you, Mr. Speaker, were kind enough to attend?

Mr. Morrison: Yes, and I hope that you enjoyed the concert, Mr. Speaker. It would be only fair to say that the entire energy industry should be commended for its sponsorship of the arts.

British Coal

Mr. O'Brien: To ask the Secretary of State for Energy when he last met the chairman of British Coal; and what was discussed.

Mr. Wakeham: I meet the chairman of British Coal regularly to discuss all aspects of the coal industry.

Mr. O'Brien: During the right hon. Gentleman's latest discussions, did the chairman of British Coal outline the concern of people working in the mining industry and those in the mining communities about the 30 per cent. increase in electricity prices between April 1988 and 1990, with further increases to come? Those increases have occurred despite the fact that coal prices have remained the same or, in some cases, even been reduced. Is not the only purpose of such increases to fatten the bottom line of the CEGB's accounts? Is not that screwing the miners, the old people and the domestic customers? When will the Secretary of State ensure that customers, including the miners who produce the coal, obtain a fair deal?

Mr. Wakeham: I did not discuss that matter with the chairman of British Coal, but I did discuss the advantages for the coal industry of the passing of the Coal Industry Act 1990, which provides £5 billion to £7 billion of grant that will enable the coal industry accounts to be cleared of the hangover of past debts and will provide a good basis for the future. In addition, British Coal has secured a

three-year contract with the generating industry at prices which, I hope, will enable it to be the supplier of first choice in the long term.

Mr. Hind: Does my right hon. Friend agree that the contracts between the electricity industry and British Coal are an extremely good deal for British Coal? Will he convey that view to its chairman? Does he—

Mr. Speaker: Order. One question please—that is only fair.

Mr. Wakeham: It is a good contract for British Coal and for the generators. The important matter is that it is still a tough contract for British Coal. Although it has made great strides—productivity is up by more than 75 per cent. on pre-strike levels—further productivity gains are essential. I believe that the industry has the technology, investment and skills to achieve that.

Mr. Hardy: Does the Secretary of State accept that the chairman of British Coal should have told him that the pursuit of international supplies of low-sulphur coal could be a wild goose chase? Will he explain to the chairman of British Coal the precise nature of the mathematical formula which The Daily Telegraph told the world the right hon. Gentleman was capable of explaining to the House and the public?

Mr. Wakeham: The answer to the mathematical formula is 10·6 per cent.—the fossil fuel levy.

Mr. Cummings: Is the Secretary of State aware of the chairman's recent remark that the north-east area is the jewel in the crown of British Coal? In view of that, does he agree that it is time to embark on a massive programme to fit flue gas desulpurisation equipment to make the importation of low-sulphur coal unnecessary?

Mr. Wakeham: I will not discuss which area of British Coal's activities is the jewel. There are many hardworking and highly skilful miners all over the country. I have nothing further to add to what my hon. Friend the Under-Secretary of State said recently about FGD. We are committed to the European directive. It is clearly laid down and we shall ensure that it is achieved. British generating companies are considering their plans for how best to implement it. My view is that they will implement it partly by fitting FGD, partly by switching to some new stations for gas burn and partly by importing low-sulphur coal.

Oral Answers to Questions — THE ARTS

Public Buildings

Mr. Gerald Bowden: To ask the Minister for the Arts what plans he has to improve the fabric of buildings under his control by the year 2000.

The Minister for the Arts (Mr. Richard Luce): As I announced at the Museums Association centenary conference in September 1989, one of the major challenges that I have set is to get the national museums and gallery buildings for which I am responsible into good shape by the end of the 1990s.

Mr. Bowden: In welcoming my right hon. Friend's statement about museums and galleries, may I ask him to consider the plight of other great public buildings,


cathedrals? Although they are not within his precise remit, they are often beyond the scope and resources of their deans and chapters. Would not it be a good idea to put them in order to face the next 1,000 years?

Mr. Luce: As my hon. Friend says, cathedrals are not my direct responsibility. I have noticed throughout the country several appeals for cathedrals which are meeting considerable success. With regard to my direct responsibilites, we should do our best to get our national institutions, galleries and museums into good shape. I am glad that, on top of the Government's additional £180 million in the next three years, Lord Wolfson and his foundation have agreed to provide £12 million over the next three years to help the renovation of our great museums and galleries.

Mr. Jopling: Does my right hon. Friend recall that there are only 35 known paintings by Vermeer of which two have been stolen in the recent past, following last week's Boston art theft? Will he carry out urgent checks on the four buildings in this country where there are paintings by Jan Vermeer so that those incomparble paintings are not put at risk?

Mr. Luce: I note my right hon. Friend's comments carefully and I shall certainly look seriously at the matter. The restitution of stolen works of art is a serious problem. I am considering it against the background of the review of export controls for works of art in 1992.

Mr. Fisher: I warmly welcome the generosity of Lord Wolfson and the Minister's response to it, but does not Lord Wolfson require that his gift be disbursed within three years? How can local authorities respond to initiatives about local museums when the Government have bound them hand and foot with penalties, the poll tax and this week, if we are to believe it, charge capping? What advice will the Minister give local authorities which want to respond to and participate in Lord Wolfson's generosity but cannot because of the Government's policies?

Mr. Luce: I am glad that the hon. Gentleman welcomes the new improvement fund for the fabric of museums. He is right to suggest that they apply to local museums and galleries as well as to national institutions. That is an important development. Together the Government and Lord Wolfson's foundation have earmarked £12 million for the next three years with an option to continue for a further two years with additional money. That money can be committed over a timespan which is agreed among the institutions, the local authorities and the private sector, which I hope will play a positive role.

Private Patronage

Mr. Butler: To ask the Minister for the Arts what is his latest assessment of the contribution of private patronage to the arts.

Mr. Luce: Precise figures are not available for private donations to the arts, although there have been a number of outstanding acts of generosity such as that of Mr. Tsui to the Victoria and Albert and the Sainsbury family to the National gallery.

Mr. Butler: Does my right hon. Friend accept that the announcement about gift aid in the Budget could improve funding to the arts in the future?

Mr. Luce: My hon. Friend is right. The arts world has been asking for a long time that we provide better tax facilities to encourage more individual and corporate giving to the arts. I join my hon. Friend in welcoming most warmly the decision by my right hon. Friend the Chancellor of the Exchequer which will help enormously to encourage the culture of giving and the growing number of individuals and corporations who wish to contribute to the expansion of the arts.

Mr. Bermingham: Does the Minister agree that at a time when the export of works of art is increasing, he should have a word with the Chancellor of the Exchequer about persuading the Inland Revenue to be more generous in accepting works of art in settlement of inheritance tax?

Mr. Luce: That is an important point. There is concern to preserve the most important parts of our heritage. I hope that the hon. Gentleman agrees that the acceptance-in-lieu arrangements work extremely well. There is a reserve of £million,in addition to my budget of £2 million, which has been drawn on considerably and is working well, and there are the private treaty sale arrangements. All those measures, together with the work of the National Heritage Memorial Fund, provide considerable sums of money to enable us to preserve our heritage.

Wilding Report

Mr. Robert G. Hughes: To ask the Minister for the Arts what representations he has received since his statement on the Wilding report; and if he will make a statement.

Mr. Luce: I welcome the general support for my statement on the Wilding report.

Mr. Hughes: Does my right hon. Friend agree that his statement has been widely welcomed in the arts world, because it redefines what everyone knows should have been the case—that the Arts Council lays down the strategy, but most of the work and grant-giving should be done in the regions where people know what is going on and where the excellence is?

Mr. Luce: I am grateful to my hon. Friend. I am glad that there has been strong support for that decision. As he implies, we should not underestimate the continuing important role of the Arts Council in devising an overall strategy for arts in the United Kingdom and for specific responsibilities, such as innovation, touring and a number of important matters. Its role and its accountability in partnership with regional arts boards will be important.

Dr. Kim Howells: Does the Minister recognise that the Wilding report has nevertheless generated much worry, especially in craft circles, that the Crafts Council will be merged with the Arts Council in a way that will be detrimental to the specific nature of the pursuits of craftspeople?

Mr. Luce: When making the announcement about the Wilding report, I made it clear that the Crafts Council will retain its independence. However, to ensure that we do not have duplication of resources, and to benefit craftspeople as much as possible I am asking the regional arts boards and craft units to work closely with the Crafts Council in the years ahead.

Government Grants

Mr. Harry Greenway: To ask the Minister for the Arts (a) what Government grants were made to the arts between February 1974 and June 1979, (b) what grants have been made since June 1979; and what was the average annual increase in real terms in each case; and if he will make a statement.

Mr. Luce: Grants to the arts have risen from £157 million in 1979–80 to £449 million in the current year—an annual average increase in real terms of 3·6 per cent.
I regret that comparable information about grants in the earlier years is not available, but the total under the Department of Education and Science programme in 1978–79 was £129 million.

Mr. Greenway: Is not it clear that under this Government, grants to the arts have increased more in real terms than under any previous Government? Does not that show that the Government are paraclete and encourage the arts, and that the Opposition are nothing but a bunch of philistines?

Mr. Luce: My hon. Friend is absolutely right about our commitment to the arts on behalf of the taxpayer. The fact that, under the new funding arrangements, the Government have decided to increase overall funding for the arts in the next three years by 24 per cent. demonstrates our commitment to the arts. We believe that the taxpayer should underpin the expansion in the arts funding by the private sector.

Mr. Heffer: What personal representations has the right hon. Gentleman made to people in the private sector? For example, Tate and Lyle has made no contribution to the Tate gallery in Liverpool, although the company made its money in that city. Is not it important that the Government should make representations to that company? I have done so, but without great success. Would not it be a good idea if those who make money in the city of Liverpool made a contribution to the arts there?

Mr. Luce: As the hon. Gentleman knows, I am keen —obviously he does not oppose it, either—on an effective partnership being developed between the public and the private sectors and on corporations realising the benefit to them of contributing to the community through sponsorship or through donations. I want them to play their part, but they must decide, because they are accountable to their shareholders. I hope that the hon. Gentleman welcomes the decision of my right hon. Friend the Chancellor of the Exchequer to encourage giving through the gift aid arrangements that will be introduced next autumn.

Towngate Theatre, Basildon

Mr. Amess: To ask the Minister for the Arts whether he has any plans to visit the Towngate theatre in Basildon.

Mr. Luce: I have no present plans to do so. I last visited the Towngate theatre in April 1988.

Mr. Amess: If my right hon. Friend were again to visit the Towngate theatre he would be shocked to learn of its serious financial circumstances due to the gross irresponsibility of the local Labour council, which has

given an additional £600,000 to the theatre to prevent it from going into liquidation? Does he recognise the anger of my constituents who want to support a viable theatre but who do not regard its financing to that degree as being in any way helpful to Basildon's community charge of £478?

Mr. Luce: I hear what my hon. Friend says. It was he who welcomed my visit to the theatre when I saw the wide range of facilities that it had to offer. My hon. Friend is absolutely right. The arts world must live within its means. It is for the local authority to decide how much it should give to arts organisations, but at the end of the day it is accountable to the charge payers. It must account for the money that it spends on the arts and other activities.

Oral Answers to Questions — CIVIL SERVICE

Code of Conduct

Mr. Beith: To ask the Minister for the Civil Service what representations he has received from the Civil Service unions about the proposed new code of conduct.

The Minister of State, Privy Council Office (Mr. Richard Luce): None, Sir.

Mr. Beith: Surely the Minister is aware of the First Division Association's representations on behalf of senior civil servants? Will he take careful note of its concern about the unqualified assertion in the new code that the duties of civil servants to the Crown are, for all practical purposes, owed to the Government of the day? When a Minister asks to see the papers of a previous Administration and is told by a civil servant that he cannot have those papers, is not the civil servant showing a duty to the integrity of Government as a whole? Is not that one of several instances where the duty extends beyond that to the Government of the day?

Mr. Luce: I do not understand the hon. Gentleman's point, but I do not think that there was any broad quarrel in the discussions with the union about the fact that civil servants are, broadly speaking, acountable to the elected Government of the day. That must be right, although one point of discussion with the union was that specific categories of civil servants, including lawyers, are more widely accountable under certain statutory provisions. That is understood. However, no one can undermine the concept that civil servants are accountable to the elected Government of the day.

Mr. Beaumont-Dark: Does my right hon. Friend accept that when Sir Robin Butler appeared before the Treasury and Civil Service Select Committee I asked him the point blank question whether he thought that the new code made it more difficult for a civil servant to be faithful to his conscience and to the country, and he said, no? The reason for his answer was that a civil servant's duty must be to the Government of the day—not as a slavish follower but because any civil servant must serve the master of the day. If the master changes, his loyalty can change, not because he is a sycophant but because, if he does not carry out the will of the electorate whose will does he carry out?

Mr. Luce: My hon. Friend is right. It must be constitutionally right that civil servants are responsible to the elected Government. As he implied, if there is a


problem of conscience, the procedures are clear. The Armstrong guidelines have made it clear since 1987 that a civil servant can appeal first to his permanent secretary and then, if he is not satisfied, to the professional head of the Civil Service. That is the right course to pursue.

First Division Association

Mr. Barry Field: To ask the Minister for the Civil Service when he last met representatives of the First Division Association; and what matters were discussed.

Mr. Luce: I have not done so recently.

Mr. Field: Did my right hon. Friend read the report in The Times on 19 March of an interview with Sir Robin Butler? Does my right hon. Friend agree that that is another example of the open government that was promised as policy by my right hon. Friend the Prime Minister? Will he confirm that he will consult the First Division Association about the disestablishment of the Church of England now that His Grace the Archbishop of Canterbury has announced his resignation and—

Mr. Speaker: Order. That is a little wide of Civil Service questions.

Mr. Field: It is a constitutional reform—

Mr. Speaker: Perhaps, but one question at a time.

Mr. Field: It is a constitutional reform, Mr. Speaker, which I think will be very popular.

Mr. Speaker: It may be, but that has little to do with the First Division Association.

Mr. Luce: I am most flattered that my hon. Friend considers that I have such a wide range of responsibilities. Having taken a keen interest in the establishment of Government agencies, he will know that it gives scope for much more open government, because the chief executives of those agencies can give evidence to Select Committees if they wish. Through that procedure, performance targets and measurements can be assessed by Parliament.

Mr. Alan Williams: Does the Minister realise that what he has just said about appeals has long been accepted, but was seriously damaged when the head of the Civil Service admitted that, at Ministers' behest, he had been economical with the truth? That statement did an enormous amount to undermine the integrity of the Civil Service. Does he accept that since then civil servants have, understandably, had great misgivings about what they used to consider a reliable appeals system? Many now believe that they need an outside and impartial point of appeal.

Mr. Luce: The right hon. Gentleman is entitled to his views. However, I should point out that the procedures that allow civil servants to appeal on matters of conscience—ultimately to the professional head of the Civil Service —have been in operation only since late 1987. I do not believe that it is true that confidence in the professional head of the Civil Service, Sir Robin Butler, has been in any way undermined—it is strong. I consider him an outstanding civil servant, and the vast majority, if not all, of the Civil Service feels the same.

Civil Service Unions

Mr. Skinner: To ask the Minister for the Civil Service when he next intends to meet Civil Service trade unions; and if he will make a statement.

Mr. Luce: I meet the Civil Service unions from time to time to discuss a range of matters.

Mr. Skinner: Will the Minister confirm that high-ranking civil servants from Oxford and Cambridge have been called upon to change the poll tax regulations about 12 times since the system came into operation? Will he give a guarantee that civil servants will not be called upon to bend the rules in a partisan political fashion to bring about the charge capping of Labour authorities, while finding a method by which to leave out Tory authorities? Will he also guarantee that the complaints procedure will be adequate for people to make the appropriate appeals?

Mr. Luce: What with questions about the Archbishop of Canterbury and about the poll tax, the assumption seems to be that I am the Minister for everything. On this occasion, I can tell the hon. Gentleman that civil servants —as we said earlier—are accountable to Ministers, and Ministers are accountable to Parliament. That is our constitutional system, and I am surprised that the hon. Gentleman does not understand that.

Mr. Aitken: Is my right hon. Friend aware that he is being asked such a wide variety of questions because the Civil Service has claimed such omniscience for so many years? The famous title given to civil servants—GCMG —was always known as "God calls me God", which seems very appropriate for the Archbishop of Canterbury.

Mr. Luce: I do not know whether my hon. Friend was recommending me for that as well. Let me make it plain that I believe that we have an outstanding Civil Service, which has a great sense of duty. Civil servants owe that duty to the elected Government of the day, and they serve those Governments with great loyalty and impartiality.

Dr. Marek: What developments can we expect in the provision of workplace nurseries for civil servants?

Mr. Luce: As the hon. Gentleman knows, my right hon. Friend the Chancellor of the Exchequer has rightly responded to representations asking him to encourage the employment of more women in not only the Civil Service but all employment sectors. With many other people, I welcome that: in the next few years—especially in the 1990s—many more women will be needed in the Civil Service.

Next Steps Agencies

Mrs. Gorman: To ask the Minister for the Civil Service what recent representations he has received regarding the candidatures of passport offices to become next steps agencies.

Mr. Luce: The Passport Office is one of the 42 announced candidates for agency status. The main aim of the next steps initiative is to deliver Government services more efficiently and effectively, within available resources, for the benefit of taxpayers, customers and staff.

Mrs. Gorman: As we approach the season of cherry blossom, Easter holidays and Passport Office strike


mayhem, will my hon. Friend consider bringing into the discussion some of the private organisations that are well experienced at making the necessary checks for the credit agencies and the banks, on the grounds that they turn round applications, having made all necessary checks, within a maximum of 10 days and at a cost of less than £2 an inquiry? Will my right hon. Friend give me his opinion on that possibility?

Mr. Luce: My hon. Friend will be aware that although it is primarily the responsibility of my right hon. and learned Friend the Home Secretary, plans are well advanced for the establishment of an agency within the passport service. However, my right hon. and learned Friend has made it plain that he will use relevant private sector expertise where that would help to improve standards of service. Of course, the decsion to establish an agency, along with all the other agencies that we now have, is to help to improve services to the public. I hope that my hon. Friend will welcome that.

Disabled People

Mr. Wareing: To ask the Minister for the Civil Service what plans he has to encourage Government Departments to adhere to the quota system in order to ensure that better opportunities are available to enable disabled people to be recruited into the Civil Service.

Mr. Luce: All Departments aim to employ a 3 per cent. quota of staff who are registered as disabled. We will shortly be publishing a revised code of practice on disability to help to increase employment opportunities for disabled people in the Civil Service.

Mr. Wareing: It is nice to hear the Minister, who is sitting next to the Minister with responsibility for the disabled, say that the Government are trying to ensure that the quota is met, but they are not achieving much. Not a single Government Department, including the Cabinet Office, adheres to the 3 per cent. quota. Is that because it is really the Government's intention to phase out the 3 per cent. quota?

Mr. Luce: The latter part of the question is for my right hon. Friend the Secretary of State for Social Security, but the hon. Gentleman is wrong to suggest that no Department has met or exceeded the quota of 3 per cent. At 1 June 1989, five Government Departments were above the quota and four had reached 2·5 per cent. Overall 1·3 per cent. of Civil Service employees are registered disabled, which is a little more than the figure for the national work force.

Social Fund

The Minister for Social Security (Mr. Nicholas Scott): With permission, Mr. Speaker. I will make a statement on the social fund. The House will recall that on 21 February the High Court delivered judgment on applications for judicial reviews in three cases concerning the social fund.
The judgment confirmed the power to give directions for the control and management of the social fund. It also confirmed the directions on how social fund inspectors are to review decisions, but found that some guidance was not consistent with the direction. Finally, it found that some aspects of the guidance on budgets was too prescriptive, and therefore not valid as guidance.
On the day of the judgment, the Department sent a letter to social fund officers informing them that the local office budget and the level of priority that might usually be met were factors to be taken into account in reaching a decision, but they were not the overriding factors. I am now in a position to set out in detail the further measures we shall be taking in response to the judgment.
We are today issuing new guidance to all social fund officers to take account of the court's decision that some of the guidance on the budget in the social fund manual was couched in language that was too prescriptive for guidance.
We are also issuing guidance today about applications for review from people who may have had applications to the fund turned down on grounds of insufficient priority because of budgetary constraints. A leaflet for the public to provide information on this matter is being distributed to DSS local offices.
As I have already mentioned, local offices were advised on the day of the judgment that the guidance on budgets was defective. From then onwards, cases should not have been refused on the basis of the defective guidance. However, if any applicants are dissatisfied with the social fund officer's decision they have the right to request a review in the ordinary way.
Although the court found that some of the guidance on budgets was too prescriptive, its judgment explicitly recognised that Parliament clearly intended that the social fund should be subject to strict monetary limits and that the Secretary of State needs to be able to give directions to achieve financial control. In the light of that, and so that there should be no doubt that it is the Government's intention that the social fund should be operated within a firm budgetary framework, I am introducing an amendment in the current Social Security Bill to make explicit the power of my right hon. Friend to give directions relating to the financial control of the fund. The amendment will similarly put beyond doubt my right hon. Friend's power to specify who is eligible for payments from the fund.
We will also take the opportunity to introduce two other minor amendments for the purposes of clarifying the procedures for applications for loans from the fund and the date on which an application to the fund is to be treated as having been made.
Copies of the new guidance on budgets and reviews and of the leaflet are in the Library.
I should also like to take this opportunity to remind the House that on Friday 16 February my right hon. Friend the Secretary of State for Social Security laid the Social

Fund (Miscellaneous Amendments) Regulations. These will introduce a number of beneficial changes to the scheme, with effect from 9 April. In particular, they will implement two changes which we announced in the uprating statement. First the change to the capital rule, which he made for social fund cold weather payments in January, will be extended to the other social fund-regulated payments. Thus, people aged 60 or over may qualify for help whilst retaining up to £1,000 rather than £500, in savings. Secondly, the regulations will increase the amount payable for maternity expenses from £85 to £100.
Finally, I wish to turn to the social fund budget for 1990–91. The House will recall that I announced last year that the gross allocation for discretionary payments in the coming year, 1990–91, would be £205 million. However, our experience of operating the loans element of the fund has clearly shown that it will be possible to use the available resources even more flexibly next year through the recirculation of repayments returning to the fund. I am therefore pleased to say that I am now able to increase the gross allocation by a further £10 million for 1990–91 to £215 million. This means that the gross budget for 1990–91 will be £12 million higher than the allocation made in April 1989. The £215 million will be divided to provide £152 million for loans and £63 million for grants. As in previous years, I shall be holding back £2 million as a contingency reserve.
In allocating the budgets to local offices, we have included the value of the additional allocations amounting to £3 million made in December and January to 106 offices facing particular pressure. I emphasise that every one of the Department's 448 local offices will receive a higher allocation next year. Of these, 15 per cent. will receive budget increases of 10 per cent. or more, compared with their April 1989 allocations, and nearly three quarters will get increases of 5 per cent. or more.
I shall circulate in the Official Report a list of the allocations to individual offices. I have also placed a copy of the allocations in the Library, together with a note explaining how they were calculated. I am confident that the measures I have announced today will ensure that the social fund continues to be a fair and flexible scheme for those who are most in need.

Mr. Michael Meacher: Is the Minister aware that there is a black hole in the middle of his statement? I refer to the fact that he has not told us what his amendment to the Social Security Bill is. He has not told us the one thing that the House needs to know—his answer to the High Court's judgment against him that he cannot have flexibility and discretion and a cash-limited budget at the same time.
Is the Minister aware that the real meaning of this disingenuous statement is that the Government intend to ignore the High Court decision, to give a nod and a wink to social fund officers to muddle through as best they can for the next three months or so, and, when the Bill becomes an Act in the summer, to issue a directive making it clear that the cash-limited budget must in all cases be the overriding consideration? Thus, any pretence of flexibility or discretion is removed.
Is the Minister aware that this is an incompetent, cynical and dishonest response to the High Court judgment? It is incompetent because it leaves local offices in a state of limbo, with a legal national budget to which social fund officers are entitled to have regard, but with


local cash limits that DSS staff cannot use as a reason for rejecting applications. It is cynical because, effectively, it puts the High Court decision on ice. It is dishonest because it sidesteps any proper review of past claims in the light of the High Court ruling. On that specific point, will the Minister tell the House why he should not now instruct offices, which know exactly how many cases—and who —have been refused on priority grounds, to contact all these people and to review their claims?
Is it not clear that the statement completely dodges the central issue—that a cash-limited budget of £205 million, which has been raised by less than the rate of inflation to £215 million, cannot act as an adequate substitute in meeting need for the system of single payments, whose budget in 1986–87 of £365 million was almost twice as high?
Is the Minister aware that nothing in the statement eases the intolerable pressures building up on the social fund, which are leading to refusal rates for applications of 60 to 70 per cent? Nothing in the statement prevents the social fund from driving the poorest in our society deeper into poverty and debt. More than 400,000 people are having to repay social fund loans from their basic income support.
There is nothing in the statement that the Minister could not have said on the day of the judgment. We have waited five weeks for him to announce to social fund officers and to claimants that there will be no change. It is, "Business as usual, but do not shout it out too loud until the Government have squared the courts." Is not that a cynical and dishonest response to a High Court decision which found the Minister guilty of illegality?

Mr. Scott: On reflection, the hon. Member for Oldham, West (Mr. Meacher) may feel that his last remarks were unfair. Following the long and complicated judgment, it was right, in terms of the guidance that we are issuing today and whether we needed to legislate to put the matter right, that we should have taken legal advice and considered carefully what to do before making a statement to the House.
The purpose of the amendment is to put beyond doubt my right hon. Friend's right to issue directions to ensure that he is able to exercise financial control over the social fund budget.
The hon. Gentleman was wrong on his second point: the court did not find in the terms that he stated. Lord Justice Woolf said:
Although Parliament intended individual applications to be handled with flexibility, it … clearly intended that the scheme should be subject to strict monetary limits and the Secretary of State needs to be able to give directions to achieve financial control.
Lord Justice Woolf saw no conflict between strict monetary control and the flexibility that is at the heart of the social fund. That flexibility, combined with a firm budget each year, has proved its worth in the operation of the fund.
The reason why I do not believe that it is right for local officers to trawl for every claim and to try to identify the individuals concerned is that it is quite clear from the judgment that the change of circumstances since the original decision must be taken into account. It would be wrong to arouse expectations among perhaps thousands of claimants who might have been turned down only for their

change of circumstances to show that they are not entitled to claim. The flexibility that is inherent in the scheme has proved its worth.

Sir George Young: Is it not the case that my right hon. Friend's statement addresses itself squarely to the difficulties that arose from the judgment? The judgment made it quite clear that the social fund was meant to be subject to cash limits and that the Secretary of State must have power to give those directions. Does my right hon. Friend accept that Conservative Members regard the social fund as an effective mechanism for giving relief to those on low incomes and for the Department to plan its budget within sensible limits? With the extra help that my right hon. Friend has announced this afternoon, and with the amendment to the Social Security Bill, Conservative Members regard the social fund as an effective instrument of social policy.

Mr. Scott: I am grateful to my hon. Friend, and I agree with his remarks. Predecessor schemes of the social fund —single payments and so on—were totally out of control. Budgets were doubling every two years. It would have been impossible to continue with such provision and behave responsibly towards taxpayers, who provide the money for these schemes. I agree with my hon. Friend that we have achieved budgetary control and have the flexibility and capability effectively to help those most in need.

Mr. Frank Field: Would it be fair to summarise the Government's statement in one sentence: the court found that the Government were breaking their own law in respect of the rights of poor people?
Will the Minister say a little more about the extra money that will now go to all offices? Will it help some claimants who are hard pressed and whose needs have not changed since they were refused help? For example, a disabled pensioner in my constituency who had no bed and borrowed a mattress, and who has found the greatest difficulty in getting up and down from the floor, was refused help from the social fund. Can we, with certainty, assure our constituents in similar circumstances that the extra help announced today will help them, or do the Government believe that such needs can remain unmet?

Mr. Scott: I disagree with the hon. Gentleman's opening sentence in which he sought to interpret the judge's findings. The central point of the judge's finding was that some of the guidance that we had issued was set out in terms which were too prescriptive. He said that we should use the language of guidance when giving guidance, not the language of direction. We are changing our policy to accord with the court's judgment because we agree, on reflection, that that is right. That does not mean that we have been behaving illegally.
The hon. Gentleman knows perfectly well that I will not comment on individual cases. However, the fact that we have been able to increase the budget allocation for the coming year in every local office will enable extra help to be given to some of the most deserving in our society.

Sir David Price: To avoid any doubt as to the full purport of my right hon. Friend's statement, will he confirm that no social fund office will refuse a legitimate claim on the ground that it has temporarily exceeded its local budget?

Mr. Scott: My hon. Friend is entirely right to ask for clarity and I shall make the position clear. In the interim between now and when the Social Security Bill reaches the statute book, social fund offices will work on the guidance issued today, which is that social fund offices will have to take account of budget priorities, but those will not be overriding priorities, as indicated in the guidance which was found to be defective. If the Social Security Bill reaches the statute book in its present form, it will make absolutely clear my right hon. Friend the Secretary of State's power to set down firm, financial guidelines for the fund's operation.

Mr. James Molyneaux: Will not expectations be raised by the fact that this is a public statement which is presumably being broadcast? Therefore, will the Minister reconsider the suggestion made by the official Opposition that his Department and offices throughout the United Kingdom should contact applicants who have been refused? If that is impossible, can leaflets be made available soon to Members of Parliament who will have to bear the burden?

Mr. Scott: The right hon. Gentleman's second suggestion is the right way forward. Leaflets are available today in the Vote Office, if not in the Library. They are also being distributed to local offices, and local office managers are being encouraged not simply to keep them in the offices, but to make them available to citizens advice bureaux and other sources of welfare advice in their area.

Mr. David Shaw: Will my hon. Friend confirm that the effect of today's announcement is that more money is to be made available for social security? Is it not true that, overall, since the Government came to office, about three times as much money has been allocated to social security? Is not that far more than inflation would have added to social security? Therefore, are not the Government a caring Government when it comes to social security?

Mr. Scott: I am grateful to my hon. Friend for his support. Anyone who looks fairly at the Government's record since they came to office will see that, in terms of social security in general and help for the sick and disabled in particular, they have more than fulfilled their pledges to the electorate and performed a jolly sight better than the Labour party did when it was in office. We shall continue to find those resources because we run the economy much more successfully than did the Labour party.

Mr. Alfred Morris: How will the budget of the social fund be affected if the independent living fund's current financial crisis is not resolved quickly? Will the Minister comment on that problem which, as he knows, is so important for severely disabled people in terms of community care?

Mr. Scott: I recognise what the right hon. Gentleman has said. However, he will not expect me to comment in detail today on the independent living fund because he knows that I am in touch with the trustees about their difficulties. We obviously hope to make our intentions clear about future funding in due course. However, I also recognise the valuable service that the fund has provided for severely disabled people.

Mr. Robert McCrindle: While I welcome the increase in resources that my right hon.

Friend has announced, I notice that approximately 70 per cent. is to be devoted to loans and only 30 per cent. to grants. In the light of the experience of the social fund so far, does my right hon. Friend remain convinced that that is the correct ratio bearing in mind the acute difficulty that some recipients will have in repaying loans? Will he also confirm that if a beneficiary defaults on the repayment of a loan in one year that will not militate against his being able to obtain a grant from the social fund in succeeding years?

Mr. Scott: That would be a matter for individual judgment by social fund officers in the particular circumstances of the case.
On the main thrust of my hon. Friend's comments, the proportion between grants and loans is broadly the same as it was last year—

Ms. Clare Short: It was not right then.

Mr. Scott: It was not wrong then. Within those parameters, it was possible for us to find in thousands of cases that people who could not get loans were given grants instead.

Mr. Charles Kennedy: Why has not the Minister taken this opportunity to remove one of the most offensive aspects of social security reviews—the withdrawal of a claimant's right to independent appeal outwith the existing social security system with regard to a claim? The Minister has quoted figures about the increases that he is making available. Is it not true that only one in 10 social security offices will see increases in their budgets that keep pace with inflation over the past 12 months? Is it not also true that even those figures are skewed as many people do not bother to claim in the first place, because they know that they will receive a loan which will come off their existing meagre income support benefits?

Mr. Scott: On the hon. Gentleman's first point, the system of reviews, including reviews within local offices of claimants' entitlements and also reviews of the work of the social fund inspectors, has worked very well. If the hon. Gentleman takes the trouble to read the judgment of Lord Justice Woolf, he will see that considerable compliments were paid to at least one social fund inspector for the meticulous way in which he carried out his work.
On the hon. Gentleman's second point, inflation is not the main issue which must be borne in mind when we are considering something the size of the social fund. We must bear in mind the level of need and the flexibility with which we can meet it. We must also consider matters such as the income support case load. As that has decreased, I suppose that some people could have made a case for reducing the size of the social fund. We have not done that—we have increased it.

Dame Elaine Kellett-Bowman: Does my right hon. Friend accept that most sensible people believe that the single payment method was gobbling up far too much of the money available and that this method is much fairer? Have any of the 106 offices that are having difficulty run out of money, and, if so, what was my right hon. Friend able to do about it?

Mr. Scott: As my hon. Friend is aware, I share her view of the inadequacy of the single payment system and


particularly the lack of any budgetary control over such payments. As has been announced already, 106 local offices were coming under pressure towards the end of last year and we were able to allocate about £3 million to help them. As pressures have become apparent in other offices since the turn of the year, we have been able to give another £1·5 million worth of help to other offices that are under pressure. No office has run out of money or is in danger of doing so.

Mr. Merlyn Rees: Will the Minister help me to advise my constituents following a meeting of just 100 people last week, many of whom were war pensioners, war widows, and on attendance allowance or disability allowance? We sat with counsellors for a long time discussing their financial problems. Many of them said, "We cannot afford to pay our poll tax. May we go to the social fund to get a loan?" Will they be able to get a loan to help to pay their poll tax?

Mr. Scott: Certainly not unless they were on income support, which is the basic qualification for getting a loan. The categories that the right hon. Gentleman mentioned —war widows, war pensioners and the disabled—are groups to which the Government have recently given substantial help.

Mr. Tim Rathbone: Having reassured us that no office has run out of money, will my right hon. Friend also reassure us that he is content with the method of assessment of need for individual offices and the allocation of funds to those offices?

Mr. Scott: Each year we endeavour to look at the last year's allocation and see how it might be amended according to assessments of demand for the future. That requires a certain degree of fine tuning. With each year that passes we learn more about how to do that. Further, we try to ensure that no local office has too sharp a change in its allocation from one year to another.

Mr. Ted Rowlands: After the Social Security Bill has been amended, will it be possible for a local social fund officer to refuse an application on the ground that it will place undue strain on the local budget? Will the Government's guidance notes clarify the situation regarding applications for house repairs? There have been examples of one local office being given them and another not being give them.

Mr. Scott: It is up to local offices to exercise their discretion and judgment. Apart from any help under the social fund, income support can provide help, certainly with interest on loans for house repairs. The Department of the Environment also has schemes to help with such matters.
Let me make it clear that the intention behind the amendment, as I have said on several occasions, is to give my right hon. Friend the Secretary of State power to operate the fund under proper financial disciplines. It is absolutely implicit in that that local offices will be expected to adhere to fixed budgets.

Mr. David Harris: Does my right hon. Friend agree that the hon. Member for Oldham, West (Mr. Meacher) at least has the merit of consistency, because he was as over-the-top in his reaction to today's statement as

he is to all statements that are made in the House? Does he agree further that there was manifold abuse of the old system of single payments and that, given the flexibility that he spoke about today, the social fund is not only a welcome development but a proper development?

Mr. Scott: When I see the hon. Member for Oldham, West (Mr. Meacher) at the Dispatch Box, I am sometimes reminded of what the late Lain Macleod said about Lord Callaghan—"The law of averages is suspended—he is always wrong."
Of course we all knew of the evidence of abuse under the single payment scheme—it was manifest around the country. Offices had thousands of applications for similar needs within a very few weeks because of take-up campaigns rather than real expressed need within their communities.

Mrs. Audrey Wise: Will the Minister confirm that he does not collect information about different priorities given by different offices for the same types of need? How can he know whether payments are either equitable or adequate if, for instance, he does not know whether some offices deem shoes for disabled people a low priority and refuse grant on that ground?

Mr. Scott: We will monitor a number of aspects of the social fund to see whether it is meeting needs. Perhaps more important than that and more likely to meet the hon. Lady's particular requirements is the fact that, as she knows, we have commissioned research by the social policy research unit at York university. It is monitoring in some detail the effects of the social fund, and it will report next year on whether the social fund is meeting the needs that it was designed to meet when it was set up. All hon. Members will look forward to that research.

Several Hon. Members: rose—

Mr. Speaker: Several hon. Members are now rising who were not doing so before. I must put a limit on questions until 4.10 pm. We have an important debate ahead of us, in which I shall have to impose a 10-minute limit on speeches, and a ten-minute Bill.

Mr. Patrick Thompson: Despite the negative attitude of members of the Opposition Front Bench, who, as usual, are long on criticism and short on constructive policy, will my right hon. Friend accept my welcome for the extra money that is to be provided for the social fund which will benefit many of my constituents in Norwich? Can he explain under what circumstances my constituents, who have previously been refused payments from the social fund, will be able to reapply as a result of the statement, and will he also accept my congratulations on the swift way in which my local offices in Norwich respond to inquiries from Members of Parliament on behalf of their constituents?

Mr. Scott: I am grateful to my hon. Friend both for his praise about his local offices and for his gratitude about the money that we have been able to find to increase the level of the budget for the coming year. Anybody who has been turned down for a loan or a grant need only ask for his or her case to be reviewed by the local office. Those cases will then be reviewed in the light of the guidance that has been issued today.

Several Hon. Members: rose—

Mr. Speaker: Order. If hon. Members ask single questions, I may be able to call all those who wish to put a question.

Mr. Alan Williams: Will the Minister confirm that the £12 million increase that he boasted about earlier does not take any account of the fact that, as he has said, he has had to increase by £4·5 million the amount that is given to social security offices during the year? Therefore, as compared with the current year's outturn, is not the increase really about £7 million, or about 3·5 per cent., at a time when the cost of living is rising by 9 per cent. for the people he describes as the most deserving in our society?

Mr. Scott: I hope that several of the reasons that have put local offices under particular pressure will be considered one-offs for last year. In the extra resources that we are giving local offices for the coming year, we still retain an ability to respond flexibly to special circumstances, such as to what happened in north Wales recently and to other pressures that are put on local offices. We intend to retain as much flexibility as we can within the overall budgetary allocation.

Mr. Andrew Rowe: Did my right hon. Friend hear that in the question that attacked him for being disingenuous, the hon. Member for Oldham, West (Mr. Meacher) stated that the single payments fund was virtually double the present fund? By so doing, he clearly ignored about £65 million. Does my right hon. Friend agree that that carelessness with figures is precisely one of the reasons why the hon. Member for Oldham, West will never have the opportunity of being Secretary of State for Social Security?

Mr. Scott: I noticed the mistake that the hon. Gentleman made in his figures today. They were different from the figures that he used last time—and just as wrong.

Mr. Dafydd Wigley: Is the Minister aware that he let the cat out of the bag in his reply to the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) when he admitted that, after the passing of the Social Security Bill, even those who are top priority cases may not get any help if there is a directive to that end? Can the right hon. Gentleman contradict what I have just said and give an assurance that no top priority case will ever be refused simply because of lack of money?

Mr. Scott: In the light of the increased allocation that I have announced today, I see no reason why highest priority cases should not be met. In many offices, the priorities to be met will fall well below that.

Mr. Richard Holt: Did my right hon. Friend hear BBC Radio 4 last Friday evening when there was a one-sided, biased, typical BBC attack on the social fund, in which one of the so-called "typical claimants" complained that she had to repay her loan for her television and video? Does my right hon. Friend agree that there are many people who would like to have a video but cannot afford one?

Mr. Scott: On the other hand, that shows the flexibility of the social fund. I do not know the circumstances of that case, but I do know that one lady who was suffering from agoraphobia and who was unable to go out was granted a

loan to buy a television set and a video recorder to enhance the quality of her life. That shows the flexibility of the social fund in an imaginative way.

Mr. John Battle: Why has the list of priority groups not been extended to include the homeless? I refer especially to women and children who have suffered domestic violence and who end up in hostels, but who cannot be rehoused by local authorities because they cannot get a social fund grant with which to set up a new home.

Mr. Scott: There is national guidance on this, but local offices also have the ability to set their own priority cases and to give guidance to that effect. Incidentally, although the legislation at the moment is permissive, enabling local area social fund officers—normally the local office manager—to give such guidance, that will be mandatory on them in the new scheme.

Mr. Anthony Beaumont-Dark: We all sympathise with the view of any Minister who has a cash-limited budget, but a real problem arises as to where there is a genuine need. If there are more people in need than there is cash available, can my right hon. Friend assure us that it will not be spread so thin that somebody's need will not be met? That is the problem.

Mr. Scott: Any system that offers such lump sum payments within a controlled budget faces difficulties. In the New Statesman and Society on 2 March, Mr. Tony Lynes said that nobody has ever found a satisfactory way to cope with this situation. He was referring back to single payments as well as to the social fund. If Opposition Members—particularly the hon. Member for Birkenhead (Mr. Field), who is Chairman of the Select Committee on Social Services and knows a great deal about this—reflect on the matter, they will know that that is true. There will be difficulties in running a scheme at the margins of a social security provision that has to cope with exceptional needs and exceptional circumstances and is budgeted. The alternative—a single payment scheme—is unacceptable.

Mr. Robert N. Wareing: Is it not the case that, because of the inadequacy of the social fund budget in meeting the needs of all needy people, more and more needy people will be driven into institutional care? Is that efficient? Does it deal with care of the needy? Is that the economics of the Government in dealing with this matter? Is not this system inefficient, and should not the Minister think again?

Mr. Scott: The hon. Gentleman knows that the community care grants under the social fund are an important part of the community care policy. He also knows that substantial and radical changes are being made to the policy for care in the community, to operate from April 1991, when local authorities will have extra responsibilities in this sector. We must look at community care in the round, and not narrowly at community care grants.

Mr. Geoffrey Dickens: Had not the old system become a licence to print money? Does not the new system have the great merit, in an age of recycling, that it recycles money so that it can be lent again? Therefore, a lot of money benefits a lot more people.

Mr. Scott: I agree. Nobody can deny that the system of single payments was being abused and exploited, and that an open-ended budget encouraged such behaviour.

Mr. D. N. Campbell-Savours: Does not the cash limiting of a budget that provides for the poorest, and often the destitute, only reflect how the Government are simply not interested in poverty and the position of the poor? Does not the by-election in Mid-Staffordshire tell the Government that many millions of our people—

Mr. Speaker: Order—one question. The hon. Gentleman is being unfair to his colleagues. We have only three minutes more.

Mr. Campbell-Savours: Mr. Speaker, every time I ask a question, you interrupt me. Can you cease this practice? You are always doing it, and it is being commented on by my hon. Friends.

Mr. Speaker: I asked for single questions in the interests of the House, so that other hon. Members could ask questions. The hon. Gentleman always asks more than one question.

Mr. Scott: Let me put the social fund in context. The Department spends over £1 billion a week on social security, meeting need in a variety of ways. This is a fund at the edge of social security provision which provides exceptional help for exceptional needs, and it does it well and flexibly.

Mr. David Winnick: Under the single payment scheme, poor people could receive assistance for essential items such as furniture and clothing, but now they receive only a loan, which has to be paid back out of the lowest income—income support. Why is it that, time and again, the Government inflict further punishment on the poorest?

Mr. Scott: The hon. Gentleman overstates the attractions of the single payment scheme, whereby specific and detailed regulations determined whether somebody received any help. If they were just outside the provisions, they were denied any help, and if they were just inside, they got it. The social fund has an enviable flexibility.

Mr. Tom Clarke: Precisely how many personnel in the Minister's Department are employed to deal with the reviews which he has mentioned, where are they located and why do we not have a normal system of appeal?

Mr. Scott: I said in response to an earlier question that I believe that the review system has worked well. Individuals have built up considerable expertise in making these judgments. One of them was complimented warmly by the judge in the recent court case.

Mr. Brian Wilson: It seems that the Minister is more interested in pedantry than poverty. Will he elaborate on local officers not being obliged to take overriding account of their budgets? What is the practical change between the position now and what it will be in a fortnight's time? What happens to the local manager who overruns his budget in response to local needs? What happens to the poor people who are deprived if that manager is in fear of the Minister's retribution?

Mr. Scott: I do not know whether the hon. Gentleman was in his place earlier when I said that I saw no problem

in any local office outrunning its budget. I see that position continuing. Local managers are being asked not to give overriding priority to budgetary issues but to take into account a range of other factors. They have been doing that, incidentally, since the day of the judgment, but today we have issued specific guidance in that area.

Mr. Dennis Skinner: Now that the Minister has admitted that in real terms the amount of money available in total will be less next year than it was this year, taking into account inflation, why does not the Minister go to cardboard city at Waterloo, instead of leaving this place and running to a television studio to be interviewed and to twist words to try to give the impression that a real advance has been made, and address the people there who have finished up in a heap because they have been unable to get the grants that used properly to be available? Why does not he tell them how many cardboard boxes could be purchased with a £2 million contingency fund?

Mr. Scott: Although I said that inflation was not the most important element which had to be considered, and that there were other factors such as the income support case load, in practice the allocation for the coming year, compared with the allocation announced for April of last year, will be broadly in line with the index that is used for calculating increases in costs, leaving out housing costs.
Basis of Social Fund Allocations 1990–91
1. This note explains the basis on which the social fund budget allocations for 1990–91 have been calculated.
Total Social Fund Budgets
2. The breakdown of the social fund budget for Great Britain for 1990–91 is as follows:
Community Care Grants: £63 million
Loans: £150 million (gross)
In addition £2 million has been held back centrally as a contingency reserve for meeting unforeseeable demands on offices in the course of the year (eg a local flood).
Principles of allocation to local offices in 1990–91
3. The 1990–91 allocation is based on a three component formula as follows:

(i) 86 per cent. of the national grants and loans budgets are distributed between local offices on the basis of their 1989–90 budget allocations;
(ii) 6 per cent. of the budgets is distributed on the basis of need as expressed by the offices' share of the national income support caseload;
(iii) 8 per cent. of the budgets is distributed on the basis of demand as expressed by the offices' share of social fund expenditure and the estimated value of refusals on grounds of insufficient priority.

The details of each of the components in the allocation formula are spelt out in more detail below.
Distribution by 1989–90 allocation
4. This simply allocates 86 per cent. of the total budget on the basis of an office's actual allocation for 1989–90. It includes where appropriate the value of any additional allocation made to 106 offices in December 1989-January 1990. The relatively high weighting given to this component ensures that the pace of change from one year to the next is contained.
Distribution by caseload
5. Caseload figures used were the average of income support caseloads at August and November 1989. Distribution was then made on the basis of an office's share of the national caseload for each of 4 client groups as follows:
P Pensioners
E Unemployed claimants paid through Unemployment Benefit Offices


D Claimants (not pensioners) receiving a disability premium
O Other income support claimants
Social fund data were then used to weight the distribution in respect of the 4 client groups on the basis of their share of payments made in the period April to December 1989 (the latest available) as follows:

Community Care Grants
Loans


per cent.
per cent.


P
20·4
P
3·6


E
18·5
E
36·5


D
15·2
D
5·3


O
45·9
O
54·6

Allocations for 1990–91



Loans
Grants


77 Canterbury
136,144
63,403


78 Chatham
404,165
162,622


79 Chelsea
348,299
150,360


80 Chichester
65,797
31,088


81 City (London)
101,379
45,897


82 Crawley
131,540
65,465


83 Croydon
405,634
162,169


84 Crystal Palace
411,931
184,624


85 Dartford
123,756
54,756


86 Dover
102,904
43,093


87 Eastbourne
174,820
79,517


88 Epsom
60,085
27,086


89 Fareham
212,745
86,328


90 Folkestone
127,130
55,328


91 Gravesend
121,381
51,534


92 Greenwich Park
543,040
228,284


93 Guildford
129,498
59,391


94 Hastings
233,151
113,207


95 Havant
221,873
88,514


96 Hither Green
73,266
32,100


97 Hounslow
400,588
171,874


98 Hove
173,687
82,647


99 Isle of Wight
233,831
100,865


100 Kennington Park
392,920
165,513


101 Kensington
207,091
89,444


102 Kingston
143,694
63,381


103 Lewes
110,718
49,701


104 Lewisham
578,812
243,943


105 Maidstone
164,592
71,760


106 Mitcham
135,644
61,585


107 New Forest
146,950
63,445


108 New Malden
78,558
34,349


109 Newbury
85,820
39,107


110 Orpington
94,885
42,199


111 Oval
411,832
199,167


112 Peckham
373,719
150,368


113 Portsmouth North
192,992
82,902


114 Portsmouth South
200,435
75,035


115 Reading
389,218
162,972


116 Redhill
106,415
48,222


117 Sittingbourne
180,284
74,574


118 Slough
235,074
101,459


119 Southampton
511,747
211,718


120 Southwark
459,613
224,244


121 Streatham
372,453
132,927


122 Sutton
84,297
37,484


123 Thames South
35,971
14,209


124 Thanet
270,383
120,637


125 Tunbridge Wells
123,333
55,913


126 Twickenham
81,535
37,520


127 Wandsworth
222,090
95,840


128 Westminster
159,594
71,926


129 Wimbledon
177,784
75,421


130 Winchester
99,984
42,491


131 Woking
158,995
68,610


132 Woolwich
749,499
318,730


133 Worthing
163,899
74,707

Allocations for 1990–91



Loans
Grants


3. Midlands region


134 Birmingham, Bradford Street
335,250
135,351


135 Birmingham, Edgbaston
625,148
266,869


136 Birmingham, Erdington
576,932
250,364


137 Birmingham, Handsworth
799,580
329,888


138 Birmingham, Ladywood
481,753
203,371


139 Birmingham, Northfield
571,223
237,978


140 Birmingham, Perry Barr
425,380
173,351


141 Birmingham, Ravenhurst
299,270
136,751

Allocations for 1990–91



Loans
Grants


142 Birmingham, South Yardley
560,904
236,831


143 Birmingham, Sparkhill
230,820
96,834


144 Birmingham, Washwood Heath
496,594
219,871


145 Boston
131,208
58,093


146 Burton on Trent
128,828
57,409


147 Cannock
219,091
87,540


148 Chesterfield
440,639
187,762


149 Corby
189,377
78,868


150 Coventry, East
766,822
300,475


151 Coventry, West
488,648
195,622


152 Derby, Becket Street
243,130
107,559


153 Derby, Heritage Gate
142,506
61,336


154 Derby, London Road
345,640
142,485


155 Dudley, North
473,956
192,810


156 Dudley, South
216,456
96,559


157 Grantham
124,724
52,820


158 Hereford
217,681
98,940


159 Ilkeston
210,207
90,097


160 Kidderminister
256,545
100,098


161 Leamington
206,992
92,591


162 Leicester, Burleys Way
246,180
107,039


163 Leicester, Lower Hill Street
373,987
168,898


164 Leicester, Norton Street
422,097
185,193


165 Leicester, Yeoman Street
596,467
257,512


166 Lichfield
328,732
130,419


167 Lincoln, Newland
328,720
142,645


168 Lincoln, Orchard Street
384,204
175,940


169 Loughborough
185,298
80,819


170 Mansfield
391,307
180,253


171 Newcastle (Staffordshire)
249,611
102,861


172 Northampton
381,709
167,452


173 Nottingham, Castle Gate
349,577
153,998


174 Nottingham, David Lane
390,691
173,760


175 Nottingham, Shakespare Street
501,296
217,668


176 Nottingham, Station Street
390,725
178,061


177 Nuneaton
291,826
118,819


178 Redditch
199,971
83,385


179 Rugby
120,130
53,449


180 Shrewsbury
309,767
135,679


181 Skegness
92,129
41,524


182 Smethwick
520,889
216,838


183 Stafford
137,107
60,357


184 Stoke, North
436,633
202,155


185 Stoke, South
270,571
136,199


186 Sutton-in-Ashfield
196,191
84,702


187 Telford
464,842
198,959


188 Walsall, East
350,754
141,541


189 Walsall, West
466,648
205,599


190 Wellingborough
313,093
143,008


191 West Bromwich
585,650
248,315


192 Wolverhampton, North
739,143
302,661


193 Wolverhampton, South
604,938
254,817


194 Worcester
293,150
140,745


195 Worksop
250,038
106,190

Points of Order

Mrs. Ann Clwyd: On a point of order, Mr. Speaker. You may have seen alarming reports in the press this weekend with headlines such as, "Ridley backs Third World aid to Soviets". Apparently the Secretary of State for Trade and Industry is to press in the Cabinet for funds to be diverted from the world's poorest people to eastern Europe. If this is correct, Mr. Speaker, it is a most appalling suggestion. Britain is already—

Mr. Speaker: Order. I do not know whether the report is correct. What is the point of order for me?

Mrs. Clwyd: If the reports are correct, Mr. Speaker, it is an appalling suggestion. Britain is already one of the most miserly aid donors in western Europe. The value of official development assistance to the Third world has dropped by a quarter since 1979.

Mr. Speaker: Order. There is enormous pressure on time today because so many right hon. and hon. Members wish to participate in the debate on the Budget. I cannot answer the questions which the hon. Lady has put to me. I have not received a request for a statement. I am sure that what she has said will have been heard. The Leader of the house is present.

Mrs. Clwyd: I am coming to the request that I have for you, Mr. Speaker.
Given the considerable influence of the Secretary of State for Trade and Industry—

Mr. Speaker: Order. This is unfair on the hon. Lady's colleagues. She is raising matters which have nothing to do with me. I cannot entertain her point of order; she has made her point.

Mrs. Clwyd: Further to my point of order, Mr. Speaker.

Mr. Speaker: What is the point of order for me?

Mrs. Clwyd: If you would allow me to finish, Mr. Speaker, I shall make that clear. I request a statement from the Government on what they intend to do in terms of the Third world budget.

Mr. Speaker: I am sure that that has been heard by those who are sitting on the Government Front Bench.

Mr. Tony Benn: On a point of order, Mr. Speaker. I wish to ask your advice on something that touches upon a constitutional matter.
Over the weekend we heard that the Archbishop of Canterbury had announced his retirement. A new appointment would usually fall to be made by the Prime Minister under the procedures laid down. However, the House has an interest in this matter, which I have expressed both to you, Mr. Speaker, and in other ways. What I want to know simply is this: is it in order for a Member of Parliament to put a question to the Prime Minister on a matter that falls within the prerogative? Also, is it in order for me to raise this matter in the Adjournment debate tomorrow? If hon. Members were excluded from raising questions, not about the name but about the procedure, it would neutralise us and prevent us from raising matters of legitimate concern to the community.

Mr. Speaker: Order. I do not think that it is our practice to ask questions of the Prime Minister on the royal prerogative, but I am sure that, with a certain amount of sophistication, the right hon. Gentleman might make his point during the Adjournment motion tomorrow.

Mr. Benn: Further to that point of order, Mr. Speaker. I appreciate your answer, but I had hoped that you would not feel it necessary to give an immediate decision. If the Prime Minister cannot be questioned on the exercise of powers that are entrusted to her by virtue of the fact that she is Prime Minister, this House is paralysed and cannot pursue matters that can be answered only by the Prime Minister under the arrangements governing relations with the Church of England.

Mr. Speaker: Order. If the right hon. Gentleman wishes to table a question, he should go to the Table Office where advice on this matter will be given to him.

Safety in Children's Playgrounds

Mr. Robert G. Hughes: I beg to move,
That leave be given to bring in a Bill to lay down safety standards for equipment, layout and surfaces in children's playgrounds.
I introduced a Bill during the last Session that, because of lack of parliamentary time, was not successful. I wish to explain why I now wish to introduce this similar, although not identical, Bill.
Anyone who has been to a children's playground or has taken a child to one knows why the Bill is necessary. For example, most playgrounds have hard surfaces underneath the swings. The latest statistics available from the Department of Trade and Industry show that 70,000 children were taken to hospital because of accidents in playgrounds, 30,000 of them with swings.
To show how serious some accidents can be I wish to highlight one that happened in Northern Ireland. In August 1989, a nine-year-old boy fell off a swing in Hillhall. He did not deserve to fall on to a concrete kerb. He need not have broken his arm and severed two arteries. He does not deserve the fact that he may never fully regain the use of that arm. He did not deserve the fact that Lisburn council waited until after that tragedy to pledge that money was no object in keeping children safe. The question for the House is how many children's playgrounds are in that state of disrepair.
My Bill last Session resulted in one piece of good fortune for me and my children. After the playground in London to which I take my daughters had appeared several times on television—when the broken kerbs, the uneven concrete and the lumps of metal sticking out of the ground were highlighted—the local authority magically discovered that it needed to put down safer surfacing. I am grateful for that, but I should also be grateful if local authorities would think about how many more playgrounds need safer surfacing.
It is difficult to get a ten-minute Bill through Parliament, but, having had the temperature of debate raised not only by my Bill last Session but by the many people who have campaigned throughout the country wanting to know what would happen to their children's playgrounds, local authorities decided to revise their policies and to lay down safer surfacing, provide new equipment and generally uprate their playgrounds. Progress has been slow. I regret that some local authorities have even run away from the problem. They have been able to do so because some scientific data are misleading.
One report produced by Karen King and David Ball, who worked for the Greater London council scientific services and now are in business on their own, have suggested that safer surfacing is not as good as it should be and that its safety cannot be measured. The data used by

those people are not only sometimes out of date, but many are foreign, and so cannot be checked. Advice on safer surfacing and other safety matters is best left to the British experts. In this area, as in so many, British industry and British experts lead. Clearly, safer surfacing can make a dramatic impact on preventing accidents in children's playgrounds.
The Bill that I introduced last year had other effects. The Government have decided that a new code of guidance shall be introduced, and I am grateful to the Minister for Sport who will introduce it later this year. Once again, local authorities will have it brought to their attention that they need to do something about children's playgrounds. It is important that they should look at the good work done by our experts.
Last year's Bill was comprehensive. It would have changed children's playgrounds completely in about five years. Within that time, local authorities would have had to fit new safer surfacing and equipment. This Bill is much less draconian. Some people may worry about the expenditure ramifications, but local authorities will not need to spend more money than necessary. However, they must ensure that they buy the right equipment.
The main effect of last year's Bill was that, in revising their policy, many local authorities spent a great deal of money on new equipment and safe surfacing and thereby stretched the capacity of British industry. Some imports do not comply with the relevant British standards. In this Bill I am asking the House to approve that all equipment sold for use in public playgrounds should conform with British standard 5696, part 2, and the fitting advice in part 3. Where that British standard does not apply, the equipment should comply with the relevant standards laid down by DIN or other British standards. That would help and guide local authorities which are not entirely clear what they should buy. The legislation would help to prevent needless injury to many children in our playgrounds.
We cannot run away from the problem, or pretend that children's playgrounds are supervised, as some local authorities contend. The time is right, the technology and the information are there, so we should act now. I commend my Bill to the House. It is needed now and will stop many children being injured in playgrounds.

Question put and agreed to.

Bill ordered to be brought in by Mr. Robert G. Hughes, Mr. Paul Boateng, Mr. James Cran, Mr. Michael Jack, Mr. Ian McCartney, Mr. Graham Riddick, Mr. Ian Taylor, Mr. Matthew Taylor and Mr. Patrick Thompson.

SAFETY IN CHILDREN'S PLAYGROUNDS

Mr. Robert G. Hughes accordingly presented a Bill to lay down safety standards for equipment, layout and surfaces in children's playgrounds: And the same was read the First time; and ordered to be read a Second time upon Friday 4 May and to be printed. [Bill 110.]

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [20 March].

AMENDMENT OF THE LAW

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Major.]

Question again proposed.

Orders of the Day — Budget Resolutions and Economic Situation

[Relevant documents: European Community Document No. 9487/89 on the Annual Economic Report 1989–90 and the un-numbered Explanatory Memorandum submitted by HM Treasury on 31st January 1990 on the final version of the Report as adopted by the Council.]

Mr. Speaker: Before the House resumes the Budget debate, I must point out that resolution 26 on page 3421 of the Order Paper contains an error which occurred in production. The word "unquoted" in paragraphs (a) and (b) should be omitted. The resolution will be duly moved in the correct form.
As I said earlier, in view of the pressure on time, I propose to put a limit on speeches between 7 o'clock and 9 o'clock this evening, and I hope that that limit will be borne in mind by the hon. Members on the Front Benches as well as by Privy Councillors.

The Secretary of State for Employment (Mr. Michael Howard): The last seven years have seen unprecedented growth in employment and the longest and largest continuous fall in unemployment since the war. That is the reality of the economic performance of this Government. It is a record which the economic strategy set out in the Budget is designed to sustain and reinforce.
The scale of what has been achieved is far too often taken for granted. In fact, our record on jobs is unequalled in Europe, and the envy of much of the world. There are now 27 million jobs in the United Kingdom—more than ever before—3·4 million more than in 1983. Jobs have grown three times faster than the European average—faster than in France, faster than in Germany, faster even than in Japan.
We have seen unemployment falling steadily for 43 months running. At 1·6 million, it is now half what it was in 1986. Our unemployment rate of 5·6 per cent. is a full three percentage points below the European Community average. Long-term unemployment has been falling even faster than the total number of unemployed which is down 780,000 since 1986.
Some hon. Members may recall that, in the general election of 1987, the Opposition promised a reduction in unemployment of 1 million within two years. We did it in less than two—with the very economic policies which the Opposition opposed and vowed to overturn. Where would those 3·4 million extra jobs be now if the Opposition had had its way and pursued its policies of high spending and high taxation? 
The Budget statement continues to give the first priority to the control of inflation, because nothing is more calculated to undermine competitiveness and sap industrial and business confidence. My right hon. Friend the Chancellor of the Exchequer made it clear last Tuesday that we cannot afford to take risks with inflation. Of course, no one—neither the small business nor the home owner—likes high interest rates.

Mr. Martin Flannery: Is the right hon. and learned Gentleman not missing out a fundamental point? When the Government came to power, unemployment was just over a million. It went up rapidly—at an unprecedented rate—to just short of three million. A decrease from that figure is bringing down unemployment which this Government caused.

Mr. Howard: The hon. Gentleman is leaving out the fundamental issue—the fact that there are one and a half million more jobs now than there were in 1979. That is a fundamental fact that the hon. Gentleman would do well to recall.
Neither new businesses nor home owners like high interest rates, but it would be wrong to relax the tight monetary and fiscal framework at this point or to reduce interest rates prematurely. If we can get inflation under control, the prospect is for renewed economic growth, increased business confidence and more jobs. But that means maintaining interest rates at high levels for as long as necessary.
What happens to jobs in the short term depends on those who are negotiating pay settlements. If unions seek, and managements concede, pay increases which are not warranted by the competitive position of their firms, or the local labour markets in which they operate, the result will be higher production costs, declining competitiveness, and ultimately job losses.
One of the most important factors in the unprecedented growth in employment over the last seven years has been the enthusiasm of investors in other countries to put their money into British businesses. That is one of the most significant differences between the economic record of this Government and the record of the last Labour Government, and one of the most influential factors in bringing about that change has been the transformation in British industrial relations since 1979.
No one can dispute the extent of that transformation, because it is a matter of record. In the 1970s, this country lost, on average, some 13 million working days a year through strikes. The average through the last four years has been just over a quarter of that figure. In each of the last two years, the number of strikes—at 675 in 1989 and 781 in 1988—has been the lowest since 1935, and the number of strikes in January this year was the lowest January figure for over 60 years and the lowest figure for any month since September 1934.
There is one comparison which, better than any other, sums up the contrast between Labour's strike record and


the position today. In only two months of Labour's winter of discontent—January and February 1979—this country lost 5·4 million working days because of strikes. In those two months alone, more working days were lost than in the whole of 1988 or in the whole of 1989.

Mr. Eric S. Hefter: If the number of strikes is lower than ever before, and if unemployment is going down, with the result that the economic situation is so much better, why are the Government in such an economic mess?

Mr. Howard: I am sure that the whole House will welcome the voice of the ghost of the winter of discontent. What that voice uttered was wholly misconceived and wholly mistaken.
The lesson of the 1970s was clear: strikes destroy jobs. Britain's reputation for strikes, overmanning and restrictive practices exported job after British job to other countries. Since 1979, that trend has been decisively reversed.
I do not claim that the transformation of industrial relations is the result of our trade union legislation alone. What I do claim is that this transformation would never have been possible without our trade union legislation. It would never have been possible if trade union law had remained as it was in 1979, with virtually unlimited immunity for organising strikes, protection for the flying picket and power for union leaders to order their members to strike without a ballot and under threat of fines and expulsion from their union if they disobeyed.
It is all the more remarkable, therefore, that the Opposition are now committed to repealing the legislation of the last 10 years and returning, in all essential respects, to the legislation which gave this country the reputation for the worst industrial relations in the western world. They are committed to a massive extension of the scope for lawful strikes. They are committed to legislation which would once again put trade unions above the law.
I have several times challenged the hon. Member for Sedgefield (Mr. Blair) to spell out the details of his proposals for trade union legislation. I do so again now. If it is made impossible for an employer to get a court order to stop an unlawful strike, what sanction would there be against a union which failed to hold a strike ballot? If trade unions have absolute protection against the possibility of sequestration, what action could a court take if a union refused to pay a fine or damages?

Mr. Frank Haynes: The right hon. and learned Gentleman has just referred to an important point. He infrequently attends the proceedings in Standing Committee on the Employment Bill. He is therefore unaware that some of his hon. Friends have said in Committee that it is right and proper to stage a dispute if life and limb are at stake. How can one hold a ballot when life and limb are at stake? Action has to be taken immediately. Does the right hon. and learned Gentleman agree with what his hon. Friends have said?

Mr. Howard: Even the hon. Member for Ashfield (Mr. Haynes) cannot think that the measures to which I refer, and the questions that I put to the hon. Member for Sedgefield—his party's principal employment spokesman —apply to disputes involving danger to life and limb. The

disputes about which the hon. Member for Sedgefield has consistently failed to answer germane questions are those that lay at the heart of our dismal performance throughout the 1970s. The hon. Member for Sedgefield knows that a court that cannot enforce its own orders is just like a talking shop. He knows that laws that cannot be enforced are not worth the paper on which they are written. Nothing more clearly illustrates the Labour party's failure to learn the lessons of the past, or its determination to return to the policies that crippled our economy in the 1970s.
Within the overall economic framework of the Budget are a number of specific measures to promote enterprise and remove barriers to the effective matching of people with jobs. With my particular responsibilities for small firms, I know that there will be a widespread welcome for the exemption from value added tax of bad debts, for the raising of the VAT threshold to the maximum permitted by the European Community and for the simplification of the rules for VAT registration. Those are the unglamorous bits of the Budget to the general public, but they are worth around £200 million to business in a full year, and will save small firms countless hours in dealing with red tape and bureaucracy.
The Budget changes to corporation tax will also give a fillip to small and medium-sized businesses that are growing. Some 20,000 companies will benefit, and as a result many smaller companies will be able to retain more profits for investment. As my right hon. Friend the Chancellor said, those changes mean that we will have the most favourable structure of corporation tax rates for small companies in the European Community.
It is no accident that the first thing that visitors from eastern Europe want to know is how we have been so successful in promoting enterprise and stimulating the growth of small firms. In 1989, the number of new small firms registering for VAT was 80,000—virtually the same number as for the whole of the five years from 1974 to 1979.
The measure to exempt from tax the value of workplace nurseries and playgroups has been widely welcomed. Since I assumed my present office, I have probably been questioned and lobbied more on that issue than on any other. The change will encourage employers to set up nurseries and help to remove what is sometimes a daunting obstacle for those mothers who wish to go out to work. However, it is important that employers should continue to examine other ways of helping women who want to come back to work—through more part-time work, more job sharing, special arrangements for school holidays and similar measures. Current projections suggest that 90 per cent. of the growth in the labour force during the 1990s will be among women. That means that employers must find ways of encouraging those women who wish to do so to return to work. I am confident that the Budget measures will give an important boost to that process.
There are also important measures in the Budget to encourage share ownership. I take particular pleasure in the part played by the privatisation of the water industry in bringing the number of individual shareholders to 11 million—that is, one in four of the adult population. Since 1979, 29 major businesses and about 800,000 jobs have been returned to the private sector. That is good for the productivity and efficiency of those companies, and it is good for the competitiveness of the economy as a whole. It is also to the benefit of the employees of those


companies, many of whom have bought shares in the companies concerned. That has increased their involvement in those companies, and given them a direct stake in their productivity and profitability. The measures in the Budget to give roll-over relief from capital gains tax for sales of shares in employee share ownership plans will give a further boost to that process.
Finally, let me deal with training. No one in the House would seriously dispute that our continuing economic success also depends on developing a work force that is second to none in its skills and competence. If we are to compete with the best in the world, industry must strive for the best: in quality, in innovation, in customer care and in its willingness to adapt to changing demands and new technology. That means more and better training: above all, it means more people being ready to train to higher levels of skill, and to continue upgrading their skills throughout their working lives.
The Labour party delights in constantly diminishing what the people of this country have already achieved in raising their skill levels. It likes nothing better than to exaggerate the gaps between our performance and those of our European neighbours. We shall no doubt hear more of it today from the hon. Member for Sedgefield. However, we lag behind our international competitors in some areas of education and training largely because of the policies promoted by the Labour party during the 1960s and 1970s. It was its policies which reduced standards in education and sought to bring everyone down to the same level of mediocrity; it reinforced trade union restrictive practices in training and it raised levies on the best companies to subsidise the worst. Several generations of people leaving school and entering the work force were damaged by those policies. We are all still living with the consequences.
In the past 10 years, we have begun to put right the mistakes of the previous 20. We have carried through a fundamental reform in education designed to raise basic standards and to prepare school leavers better for the demands of working life. We have swept away the training levies and the training bureaucracies. We have reduced the power of the trade unions to maintain restrictive practices. We have put the emphasis in education and training back where it should be—on standards, achievement and excellence.
The results speak for themselves. We now have record numbers of young people staying on in full-time further education beyond 16; more students than ever before in higher education—more than 1 million in 1989—and a higher proportion of young people with degrees than in France, West Germany or Japan. In addition, more than 400,000 16 and 17-year-old school leavers are receiving training each year under the youth training scheme with the opportunity to acquire recognised qualifications, and a further 420,000 unemployed adults are training each year under employment training gaining new skills to help them get back to work.
Perhaps the best news is that employers themselves are responding to the demands for skilled labour in the economy. Our latest figures show that, in 1987, employers' investment in training was at a record £18 billion; and employers trained 70 per cent. more employees in 1989 than in 1984. The benefits to the economy are to be seen in the fact that, despite an unprecedented period of economic growth, reported skill shortages in 1989 were running at about half the level of the last comparable period in 1973.
For the future, we are setting up training and enterprise councils in every part of the country—possibly the most important change in the way in which training is planned and delivered for nearly 30 years. The councils will be led by senior business leaders with responsibility for developing training and small business support in their local areas. They will have substantial resources from Government at their disposal, but their prime task will be to mobilise employers in tackling their own skill needs.
My right hon. Friend the Chancellor announced in the Budget that, for the next five years, company donations to the councils would qualify for tax relief. That is a major vote of confidence in training and enterprise councils and a measure of their central importance in the Government's strategy for raising skill levels.

Mr. Kenneth Hind: Will my right hon. and learned Friend confirm that, despite the complaints from Opposition Members, industry and commerce spend £15 billion a year on training their work forces, which is approximately five times as much as the Government do, and that what was announced in the Budget, which he has reinforced today, will encourage futher training and answer many of the complaints that we hear from the Opposition? Will he confirm that Britain is taking positive steps towards improving the quality and strength of our work force?

Mr. Howard: I entirely agree with the substance of my hon. Friend's remarks, but if he will forgive me for saying so, he has underestimated the amount spent by employers on training, which was £18 billion in 1987 and has grown since then.

Mr. Giles Radice: What is the comparable figure for West Germany?

Mr. Howard: It is not altogether easy to make direct comparisons with other countries, but the hon. Gentleman ought to take some pride in the amount that has been spent in Britain. We can clearly identify the substantial sums that were invested in 1987 and have increased since then.
The new tax concession that my right hon. Friend announced for training and enterprise councils is urgently needed, because the initiative is running two years ahead of schedule. More than 600 business men and women on 66 TECs around the country are already drawing up business plans for their local areas. I hope very shortly to announce that the first councils have had their plans approved and are fully operational.
With the help of the training and enterprise councils, we shall be pursuing three major priorities in the coming year. First, we shall continue to encourage stronger links between business and education so that schools and colleges are more responsive to the needs of industry and turn out young people who are better prepared for work. My Department will be investing over £400 million in this process in the next three years through the technical and vocational education initiative and our support for local partnerships between business and education. That is in addition to the work of my right hon. Friend the Secretary of State for Education and Science in reforming the curriculum.

Mr. Tony Blair: That is a very different story from that which we used to hear from the Secretary of State's predecessor, who described Britain's training


performance as "mind-boggling", and said that we had a mountain to climb. Is the new Secretary of State disowning that analysis?

Mr. Howard: I am concentrating on addressing myself to the tasks which Britain faces. We would all do better to concentrate on those tasks rather than what the hon. Gentleman and his hon. Friends are so keen to do—at every moment to denigrate Britain's performance.
We shall also be looking to the training and enterprise councils to set targets for the training of 16 and 17-year-old school leavers which reflect the needs of the local labour market and raise the overall level of skills in the work force. We shall also expect them to look at how we can motivate more young people to want to train and to expect training as a normal part of their employment. A total of £2·5 billion will be available from Government over the next three years to support that process. In addition, we are looking to the TECs to draw out substantial and increasing employer contributions.

Mr. George Howarth: Perhaps I can help the Secretary of State to follow the interventions by my hon. Friends. I understand that there are about 800,000 engineering apprentices in West Germany. What would be the right hon. and learned Gentleman's target in Britain?

Mr. Howard: The hon. Gentleman is quite right to recognise that his hon. Friends needed help, but I do not consider that facile comparisons are the best way of addressing the problem. We have to make sure that we are providing the training which meets the needs of employers in our country and in the local areas in which they operate. That, above all, is what the training and enterprise councils will achieve.

Mr. Donald Thompson: Does my right hon. and learned Friend realise that Conservative Members are sick of comparisons with 10 years ago, which are unnecessary as 10 years ago we had nothing in anything? All the Opposition can do now is selectively choose foreign countries where they can find something that comes near to Britain. Opposition Members have referred to Germany. Representatives from our textile industry went to Germany to look at training there and found it producing nothing but industrial peasants incapable of change and flexibility. The only thing to commend it to anybody, and especially to the Opposition, was that it was extremely expensive.

Mr. Howard: I would not presume to comment on the blunt point made by my hon. Friend. It needs no elaboration from me.
We shall be looking to TECs to widen the opportunities for adults to develop and upgrade their skills, particularly skills that are in short supply. Again, the Government will support this process with over £1 billion in each of the next three years. We shall expect the councils to focus this public support on retraining unemployed people, on improving training in small firms, and on other gaps in the labour market. Above all, we shall continue to look to employers to make the major contribution in developing the skills that industry needs.

Mr. Robert Sheldon: rose—

Mr. Nigel Forman: My right hon. and learned Friend has been talking about the very important contribution made by the training and enterprise councils. Can he confirm that the Government are minded to look favourably on the whole idea of individual training allowances, which have been suggested by many people who have studied this matter as a good way of giving extra support to individuals who want to help themselves?

Mr. Sheldon: rose—

Mr. Howard: My hon. Friend may be aware that that matter is being looked at. I am afraid that, at this stage, I cannot give him the outcome of our deliberations.
What I have described is a coherent strategy, which offers the prospect of creating a skilled work force for the 1990s. Perhaps we shall hear today from the hon. Member for Sedgefield how much of this strategy the Labour party is prepared to support. Will he acknowledge, for example, that the Government are spending about three times as much, in real terms, on training as did the last Labour Government? Will he now publicly support our programmes for training young people and unemployed adults, and encourage Labour local authorities to participate? Will he today make a commitment to retain the training and enterprise councils in their present form, with the leadership of senior business people? 
Above all, will the hon. Gentleman acknowledge, and apologise for, the totally negative attitude taken by his party to every one of the training initiatives introduced by this Government in the past 10 years? No doubt the hon. Gentleman—who is turning his head away—would prefer to forget the fact that five out of the last eight Labour party conferences passed resolutions attacking the youth training scheme; that its 1988 conference declared its total opposition to employment training and called
on all Labour Councillors and Labour controlled local authorities to boycott the scheme in every possible way";
and that several Labour councils have obeyed that injunction to the letter. How dare the Labour party lecture us on training when that is its record of shame.

Mr. Sheldon: rose—

Mr. Deputy Speaker (Sir Paul Dean): Order. If the Minister does not give way, the right hon. Gentleman must not persist.

Mr. Sheldon: Will the Minister give way?

Mr. Howard: No, I am not giving way.
The right hon. and learned Member for Monklands, East (Mr. Smith) had the effrontery to say last week that training had been
grossly neglected in the past decade".—[Official Report, 21 March 1990; Vol. 169, c. 1131.]
The right hon. and learned Gentleman has a certain reputation for mastery of the language. He certainly has an odd definition of the word "neglect". Given that the Government of which he was a Cabinet member spent three times less, in real terms, on training, I wonder what word he would have used to describe his own Government's performance. I shall give way if he would like to intervene.

Mr. Sheldon: rose—

Mr. Howard: I will not give way to the right hon. Gentleman.
The Leader of the Opposition told the House earlier in this debate:
there is a consensus that there has to be increased investment … in training".—[Official Report, 20 March 1990; Vol. 169, c. 1033.]
He does not seem to have told his hon. Friend the Member for Derby, South (Mrs. Beckett), who told the House on 13 February that the only Labour promises were for increases in pensions and child benefits. Everything else, she said, is
something that we hope to do as resources allow."—[Official Report, 13 February 1990; Vol. 167, c. 179.]
Well, perhaps the hon. Member for Sedgefield will enlighten us. Is training, as the right hon. and learned Member for Monklands, East said,
the area that stands out above all others"?—[Official Report, 21 March 1990; Vol. 169, c. 1132.]
Or is it just one of many areas where Labour "hopes" to do more?

Mr. Blair: If the Minister cares so much about training, perhaps he will now explain why £300 million is being cut from the youth training budget over the next three years.

Mr. Howard: The hon. Gentleman may have overlooked the fact that, over the period to which he refers, there will be a substantial reduction in the number of young people coming on to the labour market. He may have overlooked the fact that employers have increased their contribution to youth training sixfold in the last two or three years and are expected to continue to increase that contribution. In overlooking those facts, he simply comes back with the knee-jerk reaction of the Opposition—that if any extra money is to be spent, it must come out of the taxpayer's pocket. That is the knee-jerk reaction that the Opposition always manifest when they make points of this kind.

Mr. Robert Sheldon: Will the Minister give way?

Mr. Howard: No, I am answering the right hon. Gentleman's hon. Friend, whose question would have considerably more force if he were prepared to tell us whether training is indeed a priority, as suggested by the right hon. and learned Member for Monklands, East, or simply one of the matters about which his party hopes to do more.
There was a fascinating revelation in the House last week. The hon. Member for Dunfermline, East (Mr. Brown), under pressure from my right hon. Friend the Secretary of State for Trade and Industry, was forced to concede that the explicit pledge in the Labour party policy review to burden every enterprise in Britain with a training levy of 0·5 per cent. of payroll—in other words, a jobs tax—still stands as Labour policy. His remarks are reported in column 1259 of Volumne 169 of the Official Report for
22 March.
I hope that the hon. Member for Sedgefield—who might have the courtesy to listen—will therefore explain to the House in a moment why that pledge is not mentioned anywhere in his latest policy document on training, "Investing in Britain's Future". Did he forget to put it in? Does he think that an extra burden of at least £1 billion a year on British industry is not important? Or does he disagree with his shadow Cabinet colleague that it still represents Labour policy? 
Just to help the hon. Gentleman, let me remind him of what the hon. Member for Dunfermline, East said:

of course the policy review proposals … are still this party's policies. The policy review was passed by the party's annual conference."—[Official Report, 22 March 1990; Vol. 169, c. 1259.]

Mr. Dennis Skinner: Everything has been changed since then.

Mr. Howard: The hon. Member says that everything has been changed since then. Perhaps his hon. Friend the Member for Sedgefield will tell us whether it has been changed since then.
Will the hon. Member for Sedgefield go on the record today to make it clear that the Labour party is still committed, as the policy review states at page 19, to setting up an enterprise training council with guaranteed trade union representation at every workplace? Does he believe that, as the review says at page 19, creating over 1 million quangos stuffed with trade union snoopers to "guide" and "monitor" every company's training policies will really help the competitiveness of British industry? 
Will he explain why his new training policy document not only omitted both these policy review commitments but also, unaccountably, left out the pound sign" Perhaps it was merely a printer's error. Perhaps he will tell the House today how much Labour would spend on training. If his party has any claim to being taken seriously, it will give clear answers to these questions.
The Budget strategy set out by my right hon. Friend offers the clear prospect of controlling inflation, of renewed growth, and of a productive economy capable of competing with the best in the world. It provides the long-term framework for business growth and for falling unemployment. It is therefore a Budget that has the best interests of all the people of this country at heart. I commend it to the House.

Mr. Tony Blair: After that speech, the only promotion lying in wait for the Secretary of State is the chairmanship of the Conservative party. It was a quite remarkable speech of complacency. The right hon. and learned Gentleman failed to realise that the most significant political event last week was not the Budget but the crushing defeat of the Government and their policies by the Labour party in the Mid-Staffordshire by-election. That is a reflection on not merely the heavyweight nature of our victory but the lightweight character of the Budget.
The Budget took refuge in small problems, because it shrank from the challenge of the large problems. Where it succeeded, it did so on issues that, although important, are not essential, and where it failed it did so fundamentally. That is why the cheers for it from Conservative Members were not echoed in the country. The gap between the popularity of the Budget in the Conservative party and its credibility in the country merely reminds us how great is the distance between the Government and the people whom they govern.
We all support measures to help the blind, the Football Trust, the few children in workplace nurseries and the value added tax relief for small businesses, but the questions that the people asked the Chancellor were more profound. They asked why, if privatisation was supposed to mean lower prices, they are facing unnecessary and large price increases for water and electricity. They asked why, when many believed the talk of economic miracles two years ago and budgeted, planned and borrowed on


that basis, they now face the agony of rocketing mortgages and cuts in their living standards. They were promised that the Government's rating reform would be fairer and simpler, but they now see this Tory tax—the poll tax—as so unfair that it disgusts even those who gain from it and so chaotic to administer that even long-serving Conservative councillors have resigned rather than implement it. They asked why, but they received no answers to those questions, except a concession on the poll tax which was so incompetently handled that the Chancellor must be the first in history to give away £100 million but be politically worse off as a result.
Business and industry demand an explanation of how, after 11 years of this Government, we have the worst balance of payments deficit in our history—a deficit in new and old industries—the highest interest rates in the western world, the highest inflation of any of the Organisation for Economic Co-operation and Development countries and why they are being told by Ministers of the hard road ahead and the tough medicine that we should take, as if they were newly elected and not in the second decade of continuous government.
The Chancellor's forecasts show that unemployment may rise and that it is bottoming out at 1·6 million, or closer to 2 million on the old statistical basis. People recall that the Conservative party took office 11 years ago promising a reduction in unemployment, which was about 500,000 fewer than it is today. It should never be forgotten that this Government, alone among our competitors, have had the unsought bonanza of North sea oil. The money that could have been used in planning the seeds of our future prosperity was wasted.
Our central charge is not just that the Government have squandered the opportunities of North sea oil and that they have committed serious errors of economic management but that, at best, they have neglected and, at worst, undermined Britain's industrial base and the long-term investment necessary for it.
That is evident above all in training. It is generally agreed that the key to Britain's success as a wealth-producing nation will lie in the quality of the knowledge base of the economy—the training and skills of its work force. The balance of payments gap is a reflection and product of the skills gap. Compared with our competitors abroad, that huge gap is widening. In Germany, 90 per cent. of 16 to 19-year-olds are in full-time training, in Belgium the figure is over 80 per cent. and in the United States over 80 per cent. and in Japan almost 80 per cent., but in Britain it is between 65 and 69 per cent.
There is an enormous gap between Britain and its competitor countries in the number of 16-year-olds who remain in full-time education. A report from the Confederation of British Industry found that British children are two years behind Japanese children in basic mathematical competence, that they have fewer foreign language skills than French or German children and that one third of our school leavers have no quaifications to show for their 11 years of education. In France and Germany, 90 per cent. of school leavers obtain some qualification of a standard higher than our 0-level. Thirty five per cent. of French students achieve university

entrance level. The figure in Germany is 30 per cent., yet in Britain it is 15 per cent.—less than half that of France or Germany.
In Britain, about 100,000 young people leave school each year and take up work without any proper training. In many competitor countries, that would be unlawful and practically unthinkable. We demanded answers to those questions from the Budget.
Not long ago, the Conservative party said that manufacturing industry mattered little and that we could get by without it. We no longer hear that said. France and Japan train two or three times as many people in mechanical, electrical and construction occupations as Britain. We need 50,000 craftspeople a year simply to catch up, but the gap is increasing. What is the Government's response? They want to curtail the activities of the engineering industry training board. In Germany, 2,000 more people obtain degrees in engineering, there are 15,000 more technicians and three or four times as many craftsmen—120,000, compared with our 35,000. My hon. Friend the Member for Knowsley, North (Mr. Howarth) mentioned apprenticeships. In Germany, the number of apprenticeships over the past 10 years has risen to over 800,000, whereas in Britain they are down by one third. This weekend, an analysis was published by the National Computing Centre which shows that by 1995 Britain will have a 50,000 shortfall in the skilled people necessary for information technology.
The hon. Member for Calder Valley (Mr. Thompson) said that, in the textile industry, the Germans were industrial peasants. I shall read a report on textiles from the National Institute for Economic and Social Research. It compared the performances of Germany and Britain and concluded:
Over 80 per cent. of the German machinists in the plants we visited had completed a two or three-year day release course leading to an examination qualification similar to our City and Guilds course for skilled clothing employees. About 10 times as many pass such examinations each year in Germany as in Britain.

Mr. Donald Thompson: We found that the Germans' courses were inflexible, incapable of training and inadequate for Britain's needs.

Mr. Blair: The institute found that the courses produced higher qualifications than in Britain.
In case Conservative Members think that that applied only to manufacturing or textiles, I carefully considered the position on retailing, about which a comparison has been made between France and Britain. In retailing in France and Britain—the service sector which the Conservative party says will provide this country's future—the institute found that standards were lower in Britain. Nine times more people obtained qualifications in retailing in France than in this country, and the qualifications obtained in Britain were lower. The same position can also be found in the hotel industry, another service industry.
A recent study compared Britain with Germany, where similar numbers are employed in the hotel industry. It found that in the last decade, 35 per cent. of the staff in the hotel industry in Germany had craft-level qualifications, but in Britain only 14 per cent. of staff had them. Again, the qualifications in Germany were higher, broader-based and externally set and marked. Those qualifications gave rise to not merely a greater sense of qualification among those in Germany, but greater job satisfaction. It helps in every way to have the right type of training.
Training is important not just in manufacturing or services, but in management. According to the most recent studies, management training is of a lower standard in Britain than in West Germany. It is proper to make such comparisons because that is the very sort of country against which Britain is competing. If we are unable to compete on the basis of greater skills, it is axiomatic, and accepted on both sides, that we shall lose the race in the 1990s as surely as we lost it in the 1980s. Therefore, it is no wonder that the head of the Training Agency, Mr. Roger Dawe, has admitted:
At every level we are towards the bottom of the training league table, whether in education, youth training, higher level skills training or management.
The Labour party does not decry the activities of British employers who train. Within our constituencies we all know employers who train excellently, but only a few months ago the Confederation of British Industry said:
Britain's skill levels are lower than those in most of its competitor countries and the gap is widening.
It talked of a "quantum leap in skills" or what is called "a revolution" in skills. That is not the language of complacency, but the language of challenge, which was absent from the Secretary of State's speech.
Even the former Secretary of State, the right hon. Member for Sutton Coldfield (Sir N. Fowler), described Britain's training position as "mindboggling" and said, as was headlined in Employment News a few months ago:
We have a mountain to climb".
No wonder he did so; that B1 report on training in Britain showed that almost half the work force expected to receive no further training in their working lives, two thirds of all employees said that they had received no training in the past three years and 20 per cent. of employers gave no training. Therefore, according to the Government's own study, one in five employers are not training. When asked to describe the drawback of training, 38 per cent. of employers said that it was employees leaving for other jobs. The training study found that only one in four employers had a training plan and there was little evidence of planning in training.
The position that confronts us today is, first, that we have a massive skills deficit; secondly, that deficit is in manufacturing, retailing, services and management training; thirdly, it is a deficit not merely in the quantity of training, but the quality; fourthly, the deficit is growing, not decreasing; fifthly, there are major deficiencies in attitude in certain sections of employees and employers. It is in those circumstances, and against that background, that we examine the Budget to discover what it provides to achieve a training revolution.
The Budget offers a tax concession for employers who make charitable donations to training and enterprise councils. That is so modest a proposal that, where its cost should be listed in the Red Book, there is an asterisk because the cost is negligible. Less than £5 million is lost to the Exchequer through increasing the limits of the business expansion scheme, which is much less than the £120 million given away through the abolition of stamp duty on share transactions, and less than the £5 million cost of unchanged duty on pipe tobacco, the most expensive political joke in history.
What is the Government's response to the call for a training revolution? On 6 December, the previous Secretary of State made a speech setting out what he called the "targets" that the Government should adopt for the

training problems faced in Britain. That speech was entirely in keeping with his description of the training
position in Britain as mindboggling. He said:
By the end of 1992 no young person should be employed without training, two thirds should get to national NCVQ level 2 and one quarter of them to level 3, by 1995 all of them should be at least at level 2, half at level 3.
At page 10 of his speech he said:
Unless we set ourselves those kinds of stretching targets, we shall not meet the need for upgrading and multi-skilling in a decade of continuing rapid change.
We therefore asked the Minister to say how we were
progressing towards those targets under the new Secretary
of State. I received the following reply on 8 March:
My predecessor offered a framework of objectives for the development of training in the 1990s. Progress on meeting the objectives depends primarily on action by organisations outside Government; they cannot be specific Government targets."—[Official Report, 8 March 1990; Vol. 168, c. 804.]
That was the first response of the new regime, and we heard it again today, which is why I intervened earlier.
It is perfectly clear that we are now experiencing the classic Tory trick. When the Government come up against a problem that they cannot solve, they deny its existence. There has been a subtle but important change of rhetoric, and the Government are now talking about how well they are doing, whereas the previous Secretary of State accepted, as did many others, that the problem was serious, indeed mindboggling.
The Government's second response is to cut the training budget. It is scarcely credible that against that background, and with the need for a training revolution, the Government should cut the training budget for young people by more than £300 million in the next few years —£150 million next year, £120 million the year after and £60 million in 1992–93. We are told that the reason for that is the falling number of young people and the fact that employers are carrying more of the cost. Surely we should see the falling number of young people as an opportunity not to cut spending, but to improve the quality of the training we provide. We should view the demographic changes as an opportunity to upgrade the level of Britain's skills, not cut them. Many training and enterprise councils will start by having cuts in their funding, cuts in spending per trainee and even cuts in spending per trainee week. It is not merely a cut in the overall budget, but a cut in expenditure on each trainee.

Mr. Howard: What has the hon. Gentleman been doing since 13 February, when his hon. Friend the Member for Derby, South (Mrs. Beckett) said that the Labour party had only two firm spending pledges, pensions and child benefit, and for all other sectors it would merely have to
hope and do as resources allow? Why does not he have a word with his hon. Friend?

Mr. Blair: The right hon. and learned Gentleman should have read the speech more carefully. My hon. Friend called on the Government to restore the cuts in training. The last thing that any responsible Government should do is to cut training. How do we address the revolution in training by cutting training? In addition to youth training, we must also consider adult training. Adult training is critical because it is estimated that 80 per cent. of what will be the work force in the year 2000 are working now.
At the business and cities conference on 6 December, the former Secretary of State for Employment said that by the end of 1995 all employers of whatever size should have


the seal of approval of the CBI for such things as training plans and upgrading the skills of their work forces. He added:
By not later than 31 December 1992, there should be in place a comprehensive and effective framework of sector training organisations capable of establishing and monitoring standards and capable also of providing information and advice to employers in their sectors about labour market and occupational trends and training techniques and technologies in use or development both at home and abroad.
That would seem to be an enormous task.

Mr. Robert Sheldon: I am grateful to my hon. Friend for giving me an opportunity to raise the question that I wanted to put to the Secretary of State earlier. It was a pity that the Secretary of State would not respond to me. When a new programme is announced, the Public Accounts Committee likes to know the clear objectives and, at the end of the programme, to compare the objectives with the achievements. I want to know how the Secretary of State plans to do that. As my hon. Friend the Member for Sedgefield (Mr. Blair) was saying, an attempt will be made to compare objectives with achievement within a set time scale.

Mr. Blair: My right hon. Friend is absolutely right. It was extraordinary that in a Budget debate the Secretary of State would not give way to my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) who is a Privy Councillor and the Chairman of the Public Accounts Committee. The Secretary of State was prescient in not giving way because the answer to the point raised by my right hon. Friend is that the Government are dumping the targets that the former Secretary of State set out in his important speech.
We have been looking at the sector training organisations and we have used some of the parliamentary answers secured by my hon. Friend the Member for Newham, North-East (Mr. Leighton) who is the Chairman of the Select Committee on Employment. We have examined the comprehensive bodies that are supposed to provide a wide range of advice across the spectrum. The notion that we can provide such a sector training strategy with the kind of organisations listed in a written answer to my hon. Friend the Member for Newham, North-East on 5 March is frankly laughable.
We have been checking up on some of the sector training organisations to discover what resources are available to them. Earlier I said that by the middle of the 1990s, we would have a shortfall of 50,000 in information technology. At present, the computer services industry training council covers 44,000 people and that number will soon increase to almost 300,000. At present, that council has five full-time staff. The national retailing training council, which covers 2·5 million people, has only five full-time staff, but that is more than many other councils. The United Kingdom Agricultural Supply Trade Association has only 1·25 people covering the whole association. Only 0·6 of a person covers the National Association of Master Bakers, Confectioners and Caterers. The idea that that amounts to a comprehensive sectoral strategy is, as I said, laughable.
That is the background against which the Government are abandoning targets, making cuts and trying now to

deny the extent of the problem because they lack the will to solve it. That is the context in which the Budget's negligible contribution should be set.

Mr. Howard: The hon. Gentleman has been addressing the House for nearly 25 minutes. Conservative Members have been waiting patiently for him to answer the questions that I put to him during my speech. When will he tell us whether the jobs tax still forms part of Labour party policy? When will he tell us what the Labour party would do?

Mr. Blair: We would not be cutting the training budget when we should be investing more. We would be providing every young person with an entitlement to train. We would be integrating post-16 education and training, upgrading our qualifications and skills and ensuring that we have a proper legislative framework to ensure that training occurs in this country. We would ensure that there are sanctions against employers who do not train, because that is important. It is important that we set the kind of targets that are now being undermined by this Government's strategy.

Mr. Howard: The hon. Gentleman has just made an extremely important statement. He has told us that the Labour party would impose sanctions on employers. What will those sanctions be?

Mr. Blair: They are in the policy review. We will require a training investment contribution from employers that are not training.

Mr. Howard: That is a jobs tax.

Mr. Blair: If the Secretary of State believes that the mood of the country is one of complacency towards employers that are not training, he is wrong. It is vital that we have a policy to deal with the one in five employers who do not train. That is why the TECs were appalled at the decision to cut training funding.
Of course employers must do more. To answer the Secretary of State's specific point, it is excellent that employers are showing more signs of commitment. However, as the employers admit, their contribution is in addition to, and not in substitution of, the Government's contribution. If TECs are seen simply as the means of the Government disengaging from their responsibilities, the whole project will fail.
That is why the Budget does nothing for training. It does nothing for the plight of the millions of low-paid people. It does nothing for the problems of families living on reduced child benefit and it does nothing to alleviate the hardship of millions of our citizens who face the poll tax.
As constrained as the Chancellor of the Exchequer was by the errors of the past—

Mr. Hind: Will the hon. Gentleman give way?

Mr. Blair: No.
We were entitled to look in the Budget for some recognition of the long-term structural problems facing British industry. We now have a better chance than at any time in recent history to create the training revolution that we need. There is support for that everywhere; in industry, among the unions and, most crucially, among young people and those already in work.
We, therefore, have a great challenge and a great opportunity. It is not the poverty of aspiration among the


British people that we need fear, but the poverty of aspiration of the Government. As the Conservative party's position crumbles and Conservatives begin to fight the Tory party's internal battles because they have lost the battle for the electorate, the Labour party will look forward with enthusiasm to meeting the challenges ahead, not as critics in a Labour Opposition, but as Ministers in a Labour Government.

Mr. Nigel Lawson: I shall be brief. Partly for that reason, I shall not follow the debate that we have just heard about training, but will talk about matters more closely related to the Budget which we are debating today. I have to say on the subject of training that there is agreement on both sides of the House of its importance— there is no doubt about that.
I have to confess that I was astonished by one omission throughout the speech by the hon. Member for Sedgefield (Mr. Blair). Not once did he mention the vital correlation between the amount of training done by business and industry and the profitability of business and industry. Those things are intimately connected. It was the abysmal levels of profitability of British industry in the 1970s that led to the very low level of training at that time. It is the recovery in profitability which has occurred during the 1980s and which will continue, I trust, during the 1990s which is so important for all our aspirations in the future.
I should like to commend my right hon. Friend the Chancellor of the Exchequer on his Budget. I commend it not least because of his rejection of the clamour that there was in some quarters for a massive increase in taxation. That would have been wholly misguided. He was right to resist it. I would like to quote his words from the Budget statement:
fiscal policy is not … a flexible instrument which should be altered to meet short-term contingencies. Fine-tuning fiscal policy is not only disruptive to the public sector, but business, and to taxpayers, but its effects on the economy are uncertain and often destabilising."—[Official Report, 20 March 1990; Vol. 169, c.1015.]
I entirely endorse that judgment.
After all, in this country—let nobody forget it—we have a very strong fiscal position indeed—one which is the envy of most of the rest of the world. Given the inheritance, it took us quite a long time to get to that position. Having got to that position, we must and will stick to it. Within that context, tax changes should be driven by long-term supply side considerations and not by the short-term requirements of so-called demand management. Tax reform, which is of such importance, has a beneficial effect on economic behaviour and economic performance only to the extent that it is believed that the changes that are made will endure. That is why my right hon. Friend is right. But, in that context, of course, it follows that the task of bearing down on inflation must continue to rest, as it has rested before, with monetary policy. Again that is something which my right hon. Friend fully acknowledged, but I have to say that that is where my doubts creep in.
Let me hasten to say that I am not referring to the incentive for the expansion of broad money which my right hon. Friend introduced, bearing in mind the fact that broad money is principally composed of deposits in banks and building societies. I have no quarral with that, even though I know that one or two of my hon. Friends might find that somewhat paradoxical. No, the danger—the

concern—lies with the exchange rate, for it is the exchange rate which threatens to undermine the strength of the Government's monetary policy, the strength of the discipline imposed by uncomfortable but necessary levels of interest rates.
Again, that is something which I know my right hon. Friend himself fully acknowledges. He himself said in his Budget statement that he favoured a strong exchange rate policy—quite right. It was a very important statement, but it may be that words alone will not be enough.
We have already seen that, since interest rates were raised to 15 per cent. as far back as last October, the exchange rate—the index—has lost about 5 per cent. of its value, and any further drift would clearly imperil the strength of the Government's commitment against inflation and their anti-inflationary policy. That is the one area of concern which I have.
What is the solution? Where do we go? Again, my right hon. Friend, in his Budget statement and again in his broadcast yesterday, very firmly restated the Government's commitment to sterling joining the exchange rate mechanism of the EMS. But my concern is that the timetable which is envisaged by the Government might be somewhat too leisurely for the circumstances in which we find ourselves. In my judgment, it is a pity that we did not join some time ago, but we did not, and that is that. But now we really cannot afford to take the risks involved in a leisurely timetable.
It may be that we should initially join within the framework of the wider bands before subsequently moving to the narrower bands, but the whole of the Government's commitment against inflation is potentially at risk. There is an exposed flank, and that is why I could favour the early entry of sterling, as I said, possibly initially with the wider bands, into the exchange rate mechanism of the EMS.
There is a further reason, too, Incidentally, it is far less important even than the increased influence that we would gain within the Community—influence which is particularly important in the context of the debate on European monetary union, in which I wholly and unreservedly support the Government's stand. It is important, too, as we come up to the intergovernmental conference, to discuss this in December of this year.
But there is another reason, too. As I listened, as many hon. Members did, to the speech by the right hon. and learned Member for Monklands, East (Mr. Smith) on an earlier day of this debate, it was abundantly clear that the Labour party has no alternative coherent policy whatever—none whatever. Yet the right hon. and learned Gentleman is seeking to conceal it and, to some extent, he has been successful with the media. He is seeking to conceal it by regular repetitions and incantations about the EMS and joining the exchange rate mechanism of the EMS. It is by removing the fig leaf from the Opposition that the true nakedness of their policy and the ugliness of what is revealed will be seen by all. That is devoutly to be wished.
We, of course, have a clear and coherent policy which, despite current difficulties, has brought the people of this country unparalleled improvements over the past 11 years. It must continue to do so, and it can continue to do so, but it will continue to do so only if that exposed flank of the exchange rate is protected. That means early entry into the exchange rate mechanism of the EMS. Of that I have no doubt whatever.

Mr. Paddy Ashdown: I am sure that the whole House and many people outside will have listened to the very interesting speech by the right hon. Member for Blaby (Mr. Lawson), the central portion of which I enthusiastically agree with. My hon. Friends and I have been arguing for some time that our early membership of the exchange rate mechanism is necessary for Britain's proper economic management. It is even more necessary now. As the right hon. Gentleman said, there is a great hole in the centre of the Budget, and that constitutes the exposed flank of the whole budgetary strategy.
As the hon. Member for Sedgefield (Mr. Blair) has said, it seems odd to reflect that the Budget was less than a week ago—so much has happened in between. Returning to the Budget debate after last week's events seems a little out of kilter with the mood. However, that is not the whole case, because at the heart of the Budget debate is a lack of any commitment to the strong economic policies that the Government have talked about in the past. That is the same lack of confidence, lack of direction and confusion that has characterised the Government's policy in the past few weeks, and for which they paid a heavy penalty on Thursday and continue to pay a heavy penalty in the opinion polls.
That is not to say that we do not recognise the difficult circumstances in which the Chancellor had to frame his Budget. It was a difficult calculation. Britain stood and remains on a knife edge between high and possibly double-digit inflation on the one hand and a recession on the other. The speech of the right hon. Member for Blaby might have been better received if he had shown a little humility about leaving his successor a legacy of serious problems to address.
Those legacies can be put in the form of three questions. First, who runs the economy? Is it No. 10 or No. 11 Downing street? We all know that that is the subject upon which the right hon. Member for Blaby offered his resignation. Secondly, what is the Government's policy? That matter has been left confused and unclear in the past few months and is, in large measure, the reason why there has been a good deal of uncertainty in the money markets about the Government and the exchange rate. The third question is, what will the Chancellor do to address the problems that are the legacy of the past 10 years and, at least in part, of his right hon. Friend the Member for Blaby? What will the Government do, for instance, about the fact that, far from a Thatcher economic miracle, we are close to a Thatcher economic nightmare? 
We have the highest inflation of any of the major OECD countries. We have a record that goes back for the past 11 years in which, far from tackling inflation, our rate of inflation has been higher than the average of the EC countries, inside and outside the EMS, for seven of those 11 years; it has been higher than the average of the OECD countries for eight of those 11 years, and higher than those of our major competitors for 11 out of those 11 years. If the Government are making the case that inflation is the judge and jury, they are guilty of having totally failed to tackle it.
One might also judge the country's economic position by the fact that wage rises here are now racing ahead of inflation and are rising much faster than those of any of our major competitors. One might also judge the economy by the fact that, as a percentage of GDP, investment

briefly blipped, to use a favourite word of the right hon. Member for Blaby, above its level in 1979—a full 11 years ago—for just a few months last year but, according to all accounts, is now plunging hard under the high level of interest rates. By the by, our interest rates are higher than those of any of our competitor nations and are very close to a record for this nation.
Presiding over all that is the fact that, throughout the past decade, Britain's share of world markets has continued to decline at a rate not dissimilar to that experienced throughout the two previous decades. We now have a balance of trade deficit of record proportions. Those were the problems that the Budget had to address.
If the Budget sought to answer those three questions—who runs the economy, what is the Government's policy and what firm action will they take to address the serious problems now facing the British economy—it provided an answer that was at best confused and at worst unconvincing.
The Government's policy is still unclear. I cannot see any thread running through it, except for the Chancellor's rhetoric that he wants to keep inflation down. But that was immediately followed by an admission that inflation would increase in the next few months. We heard only a few vague promises and prophecies beyond that. We have learnt to mistrust the Government's prophecies about inflation or anything else, because they are all remarkable for the fact that they are all breached by substantial margins.
Who runs the economy? Is it really the case, as the right hon. Member for Blaby said, that in his heart of hearts the present Chancellor believes that we should join the exchange rate mechanism now? The resignation speech of the right hon. Member for Blaby was splendid. It was one of the best speeches that I have heard in the House. In it we learned that the right hon. Gentleman had consistently argued around the Cabinet table for joining the exchange rate mechanism and that the Prime Minister was the one who had said no. We had a hint a moment or two ago that the same conditions obtain around the Cabinet table today, and that the Prime Minister is preventing that important lacuna in the Government's policy from being filled. If that is the case, the question of who runs our economic policy remains as unanswered now as it was in the days of the previous Chancellor.
If the Government's major thrust is to tackle inflation, I fear that, as has been said, the Chancellor is playing with very high risks. Whatever happens externally, his present strategy leaves him no room for manoeuvre, except to raise interest rates. In short, where we needed a Budget that was tough, with a broad thrust that the public and the markets could understand, we got a Budget that was full of minor measures, which, unless the Government are very lucky, will fail to face up to the major problems that now confront us.
The reality of the Budget was very different from the hype and the descriptions that preceded it. We were told that we would get a lion of a Budget; but the Chancellor produced a mouse. The inadequacies of that mouse of a Budget were cruelly exposed by the reaction of the City and the foreign markets.
Of course the minor measures were welcome—who would not welcome some of the things that the Chancellor did? We had been calling for some of them for some time, as had his own Back Benchers and the Opposition. I refer


especially to measures to encourage women back to work. I found it odd that in pouring some scorn on that the hon. Member for Sedgefield—

Mrs. Margaret Beckett: Barbie dolls.

Mr. Ashdown: If the hon. Lady would like to intervene, I shall be happy to give way to her.

Mrs. Beckett: I am grateful to the right hon. Gentleman for giving way. I find it difficult to square his wise words about the value of women in work with his most ungenerous remarks about my hon. Friend the Member for Mid-Staffordshire (Mrs. Heal).

Mr. Ashdown: I am not quite sure what that has to do with the debate, but as the hon. Lady has questioned me about this—as I suspected she would—I ask her to look again at my comments. I was not making a comment about that hon. Lady; I was commenting on the disgraceful way in which the Labour party would not allow a Labour candidate to speak for herself. She was treated as a Barbie doll by Walworth road. The sexist comments and approach of that manifesto are a disgrace; they completely undermine the Labour party's rhetoric about being in favour of women in society and in politics.
However, if I was to go further down that line, no doubt you, Mr. Deputy Speaker, would call me back to order. Therefore, I turn to the central question of the welcome steps taken by the Chancellor.
As I was saying, it is odd that the hon. Member for Sedgefield said, somewhat contemptuously—I tried to note his exact phrase—that the Chancellor's measures would bring back to work only "a relatively small number" of women, because not many workplaces have nurseries. Unless I am mistaken, the Chancellor has precisely followed Labour's policy on this matter. Presumably, therefore, if the Chancellor's measures will bring only a few women back to work, the Labour party's measures would bring only a small number back as well.

Mr. Blair: rose—

Mr. Ashdown: I shall give way to the hon. Gentleman, but I ask him to consider what my party has proposed, which is to issue vouchers that could be used whether or not there are workplace nurseries. Will he do that? I happily give way to him.

Mr. Blair: The right hon. Gentleman keeps saying that I treated the provisions on workplace nurseries contemptuously. That is entirely untrue. I was merely saying that they do not affect many people.

Mr. Ashdown: Then the criticism that the hon. Gentleman levels against the Government must be levelled against his party's policy, in which case it is odd for him to make it.
The Chancellor's proposals on savings are also welcome, although TESSA has a 1960s or 1970s flavour. According to the last figures that I saw, the level of debt has gone up from about 1·5 per cent. of average household income to 8 per cent. of average household income, whereas savings have dropped from around 12 per cent. to about 5 per cent. Therefore, I wonder how much money there is around to be put into new saving instruments and to what extent TESSA will be used simply to transfer savings from one account to another. The move and the

instrument are welcome, but will they achieve what the Chancellor wants? If it did, that would be advantageous, but I doubt whether it would. Let us wait and see.
The Budget failed significantly in its central thrust. As the right hon. Member for Blaby said, the hole in it is its lack of entry into the ERM. That could, and should, be the rock upon which the Government base their anti-inflation policy. It is the mechanism by which the Government could give themselves room for manoeuvre. It is true that, were we to join the ERM, that might take the pressure off the pound and enable us to bring down high interest rates, which would be beneficial. However, it would also release money into the economy, which might be inflationary. That is why my right hon. and hon. Friends and I have recommended that the Government should be prepared to alter national insurance contribution rates and mortgage interest tax relief rates, so as to take about £2 billion out of the economy.
The Government have argued that we cannot afford to join the ERM because our inflation rate is too high. It is a matter of fact that our underlying inflation rate is around 6·2 per cent. of the RPI, whereas the average rate of countries within the ERM is around 5 per cent. Spain went in, on the broad band rate suggested by the right hon. Member for Blaby, with an inflation rate of around 7·1 per cent. There is not a serious problem—it is an excuse for the Prime Minister to prevent us from joining the ERM because of her personal prejudice and passion against anything European, and in particular the ERM. As somebody else has said, it is simply an elegant way of saying no. I have a strong suspicion that the timing of entry into the ERM will be tied to the timing of the removal of the right hon. Lady. It will not happen unlit she goes.
Again, the Labour party shows a depressing lack of understanding and clear commitment about what it wishes to do about the ERM. The right hon. and learned Member for Monklands, East (Mr. Smith) has said that the Labour party would like Britain to enter the ERM, but the Labour party's conditions for that remain unchanged. It has given us no idea what those conditions now amount to. It has said that we need to go in at a competitive rate. Perhaps the hon. Member for Derby, South (Mrs. Beckett) will tell us what that competitive rate will be. Is it a devaluation? 
The second condition made by the Labour party is that there should be reflationary policy. It knows perfectly well that such a thing is simply unacceptable under the present conditions of the ERM, and the Bundesbank would never buy it for a moment.

Mr. Radice: What a load of rubbish.

Mr. Ashdown: If the hon. Gentleman wishes to intervene, I am happy to give way.

Mr. Radice: My party has made it clear that we are talking about negotiating objectives. If we were in government now, we would immediately want to negotiate our way into the ERM. That is a different position from that of the Government, who are not prepared to go in at all—certainly not while they have the present Prime Minister.

Mr. Ashdown: The hon. Gentleman is making it clear that his party—I suspect that he has different views—wants to turn the ERM into a reflationary club. None of the other members of it would tolerate that.
The position of the Government and of the Opposition are almost exactly the same. The Government argue that they will not go into the ERM until inflation is down to the level of that in Germany, while the Labour party argues that it would not go into the ERM until the Germans risk putting their inflation rate up to the same as ours. There are equally clear ways to say, "We ain't gonna do it." It is inadequate and untruthful for the Labour party to claim that it has a stronger desire than the Government to go into the ERM.

Mr. Flannery: The right hon. Gentleman will never have to face this problem, because he will never lead a Government.

Mr. Ashdown: The hon. Gentleman ought to realise that the biggest failing of his party is that, although it has become successful in opposing, it says nothing about the policies that it would introduce were it in government. The hon. Gentleman and his party are failing Britain today, although they have a real opportunity to remove the Government. They lose that opportunity by the day, because they fail to put forward proper policies. Anybody who heard the Leader of the Opposition last Friday on the "Today" programme explaining what his economic policy would be and could divine from that extraordinary collection of platitude and waffle anything that constituted something like an economic policy was capable of a divination of a high degree. The Labour party has a real opportunity to defeat the Government, but it will not do so by putting forward vacuous policies that amount to nothing.
The Budget fails in other areas. It does not realistically address the necessary steps open to the Government to protect the environment. From this Budget, I have come to the conclusion that the environment was an electoral toy with which the Prime Minister has played around and in which she has now become disinterested. The Chancellor claimed that this is a fiscally tough Budget, but we have to ask whether the £500 million that the Chancellor is taking out of the economy by bringing more people into the higher band of taxation is not more than compensated for by the £1,000 million that will be released into the economy by independent taxation. That is the moot point.
This is a weak Budget and, unless the Government are very lucky, it will be inadequate to solve the problems that confront us. The Budget does not deal seriously with those problems. It shows complacency. It is built on hope, not on solid policies. If the Government were true to their rhetoric, they would be taking risks with the Conservative party's support in the short term so as to ensure the country's stability in the long term. Instead, the Chancellor has taken risks with the economy in the long term in a vain attempt to restore the Conservative party support in the short term. We now need a party committed to free enterprise, to a just competition policy and to taking the necessary hard actions to tackle inflation. We need a party that understands the importance of Europe in that strategy, and in particular the importance of the ERM.
There was a day when some—not all—of those attributes could be claimed by the Conservative party, but not after this Budget. In it, the Chancellor takes high risks with the future. He has hoped that everything will come

right. This Budget makes the point at which the Conservative party lost its nerve. If it now loses its luck as well, the price of the Budget will be high for the Conservative party, but higher still for Britain.

6 pm

Sir William Clark: The right hon. Member for Yeovil (Mr. Ashdown) made an extraordinary speech. All that he has to offer is immediate entry into the European exchange rate mechanism. He ended his remarks by falling out with the Opposition, not with the Government. It was an extraordinary performance and I might come back to it later.
I congratulate my right hon. Friend the Chancellor of the Exchequer on the presentation of his maiden Budget. I think that hon. Members in all parts of the House will agree that his presentation was perfect. I believe that he gave us the right Budget. It has been overlooked that my right hon. Friend the Member for Blaby (Mr. Lawson) left a legacy of separate taxation of husbands and wives. That will benefit about 3 million people. I am sure that none of us will forget the achievements of my right hon. Friend the Member for Blaby.
My right hon. Friend the Chancellor of the Exchequer had a difficult decision to take. He could have gone for overkill or underkill. In the event, he presented a roughly neutral Budget. He did not opt for overkill because, obviously, he did not want to risk recession. The Budget achieved about the right balance. I agree that the City's reaction was not all that favourable, but I am sure that hon. Members who have connections with the City will agree that there seems to be too much computerisation. Far too much time is spent looking at "boxes". When the programme says sell, they sell. When it says buy, they buy. Sensitivity, on other occasions a lack of sensitivity, and instant statements have an effect on our currency.
The hon. Member for Sedgefield (Mr. Blair) did his best to denigrate the economy, but it cannot be all that sick when we consider the amount of foreign investment that comes into the country weekly. The Japanese, the Germans and the Americans, for example, are confident in investing in Britain. We must not over-react to the fears that some express. We must not panic ourselves into entering the exchange rate mechanism. There are those who suggest that the ERM is the panacea for all our ills, and the right hon. Member for Yeovil is at the fore of that group. My right hon. Friend the Chancellor of the Exchequer was right when he said in his Budget statement that we shall join it. It is only a question of when. There are more complications now, because we do not know what will happen with monetary union in East Germany and West Germany. The ostmark will be made convertible with the deutschmark or will be swapped with it. Helmut Kohl apparently took the decision to promise to swap and the Bundesbank did not want to have anything to do with it. So much for the so-called independence of the Bundesbank.
There is no doubt that the policy of my right hon. Friend the Chancellor of the Exchequer of a 15 per cent. base rate has slowed down spending and had an effect on the price of housing. Hon. Members on both sides of the House must accept that. No one has mentioned the fact that our exports are increasing. They increased by 11 per


cent. year on year and imports reduced by 1 per cent. three months on three months. We shall not see a miracle overnight, but the trend is favourable.
The Opposition are keen on credit controls as a means of controlling expenditure. How we could have credit controls without a reintroduction of exchange control is beyond me and, I should think, beyond most people. If the Opposition say that they want credit controls, that means that they are committed to the reintroduction of exchange control, and that goes against the EEC. One of the Madrid conditions of the United Kingdom's joining the exchange rate mechanism is the abolition of exchange controls throughout the Community. If the United Kingdom is to introduce credit controls and then have to reintroduce exchange control, how is it credible for the Opposition to say that they would join the EMS? Their position is illogical.
I welcome the repayment of the national debt. About £25 billion has been repaid over the past two or three years, which has saved us about £2·5 billion a year in interest payments. I suggest to my right hon. Friend the Chancellor of the Exchequer that we should not over-rush the repayment. That would make credit far too easy for any Government. My right hon. Friend has discouraged borrowing to spend and I welcome, as did the right hon. Member for Yeovil, the concept of the tax-exempt special savings account. I believe that it will prove to be a success. Personal equity plans are extremely valuable, but there has been a tremendous switch from various forms of investment into PEP.
There was some new money, but not as much as was wanted. The catchment area for savings that we should target is the person with an income between £20,000 and £30,000 a year. That sort of person will find TESSA extremely good. My right hon. Friend the Chancellor of the Exchequer has said, in effect, "If you want to spend money and you do not have that money, the cost of borrowing it will be high." That has stopped a good deal of spending, but there are those who do not have to borrow to spend, and those people will find TESSA especially attractive. There is tremendous potential, especially when we consider that there are about 11 million shareholders. Two out of every three families own their own house. There are many more people now, compared with 1979, who have something to conserve.
I regret that action was not taken on disincorporation. A family business pays capital gains tax on whatever assets it may sell. When the family tries to get the money out of the family company, it has to pay capital gains tax again. It is double taxation. I remind my right hon. Friend the Chancellor of the Exchequer that about two years ago a discussion paper was produced. It has been discussed, and I understand that many representations have been submitted to the Treasury. I hope that my right hon. Friend will let me know what is happening.
I am struck by the absence of suggestions or options from the Opposition. It is worthy of an entry in the "Guinness Book of Records". During the by-election campaign in Mid-Staffordshire the Labour party did not hold a public meeting. No answer was given to any question asked. Surely the Opposition do not think that they will be able to adopt the same stance at a general election. Do they think that it will be sufficient merely to make vague statements attacking the Conservative party's policies? That would be a con trick on the electorate.
Before 1979, many U-turns were made to the detriment of the economy and, incidentally, to the detriment of the Conservative party politically. We must go for the long-term future of the country. Of course, we are extremely unpopular at the moment, but there is no point in trying to relax polices just to gain votes. There are some rough seas ahead, but my right hon. Friend is on the right track. If he stays on course, we will succeed.

Mr. Robert Sheldon: The hon. Member for Croydon, South (Sir W. Clark) thinks that the Budget judgment is just about right. It is hard to get a Budget judgment just right, and the Chancellor bears an awesome responsibility for that.
I share one sentiment with the right hon. Gentleman, which is his admiration for Jain Macleod. My view on the Budget judgment follows that of lain Macleod. His beliefs are not mine, but his approach to political life and the standards that he held earned him the respect and regard of many people outside his party. It is more than 20 years since he said that the Budget that was cheered on the day that it was delivered tended to look rather different later. I and many others made similar points, even before that occasion. I am sure that we could go back to the last century and find similar views. However, rarely have we seen the waving, cheering and shouting that occurred at the end of the Budget statement last week, which was then repudiated by so many the following day. The poll tax remained a problem and there was a failure to deal effectively with the pound, which resulted in Bank of England intervention.
The Chancellor was generous to his right hon. Friend the Member for Blaby (Mr. Lawson). He did not blame him for his inheritance—and in these rather less scrupulous times, he earned the respect of some of us for that. The right hon. Member for Blaby thought that the exchange rate mechanism was enormously important. The reduction of inflation is the Government's principal objective, which the Chancellor confirmed in his Budget statement. The right hon. Member for Blaby thought the main way to achieve that objective was through the exchange rate mechanism. Having been denied the use of that method, it was honourable of him to resign. The present Chancellor may face a similar problem in due course.
I wish to pose two questions about the Budget. First, was it tough, and secondly, was it directed towards a general election in 1991 or 1992 or towards our economic problems? The answer to the first question came the following day with the problems of a declining pound. All Chancellors face that problem because to show toughness towards those on whom they depend to retain the value of the pound means that they frequently have to do things that they do not like. Pressures were constantly placed upon the last Labour Government to increase prescription charges. That was unimportant economically, but it showed that we were anxious to satisfy the market and do those things that we disliked most. The parallel for this Government is an increase in income tax. It may not have meant a great deal in terms of withdrawing sums of money from demand, but doing what they disliked would have shown the seriousness of the Government in their attack on inflation.
In view of the Government's difficulties in trying to engineer a recession, it did not make political and economic sense to have the pre-election boomlet in 1988. It could not be avoided because the decision was taken in the light of other matters about which the then Chancellor could not convince the Government. The Government's difficulty was simple—they wanted to engineer a recession but could not do it. They have been trying to do that for more than 18 months. In the past, the simplest way to achieve that would have been to increase taxation and Excise duties and so reduce demand, but they did not do that. I understand the difficulty with VAT, because it is a simple tax of 15 per cent. It is not as easy to change it as it was to change purchase tax. However, income tax was readily available, but the Government did not know how to deal with the ghosts of the past.
The Government were left with just one club because all the others had been thrown away. Credit restraint might have sent the right signals. Although it might not have meant a great deal in theory, we should not underestimate the importance of such actions in practice on markets and individuals. Having been trailed for more than 18 months—and I believe that we are now heading for a real recession—such action may not now be worth resurrecting. It would have been available, but the opportunity was missed.
Only the day after the Budget, I received another massive credit offer, almost geared to the Budget, asking me to borrow some more money. The problem is that we are relying on interest rates, which also increase the income of savers. Although those who borrow lose during the time of high interest rates, those who save gain. We are not sure of how much those who gain then spend.

Mr. Denzil Davies: Does my right hon. Friend agree that it is a terrible condemnation of the Government that, even with such high interest rates, which mean high interest for savers, the Government still had to give tax subsidies to savers?

Mr. Sheldon: The Government were in a dilemma. Everyone knows that they should have increased income tax. They could also have done more with Excise duties last year, but that time has now passed. It is usual to increase taxes if we want to reduce levels of inflation and demand. The Government were boxed in; they had only the one club and they did not use it wisely.
Borrowers spend less, but lenders may spend more because of the increased interest on their savings. The problem with soaring house prices is that more and more people spend up to the level of their income, fully satisfied that they can afford it. Many people feel that they need less money for a rainy day because the value of their house represents the savings that people used to make in the Post Office, with saving certificates, and so on. They now believe that they have a valuable cushion, so if they find themselves temporarily short of money, they borrow against their house to maintain their standard of living. The more the Chancellor tells them that there are good times around the corner, the more readily can they justify that borrowing, which they will believe will be short term.
The medium-term financial strategy states that the central objective is the defeat of inflation. I have the 1980–81 financial report—which I treasure—by the right hon. Member for Blaby. The very first sentence states:
The Government's objectives for the medium term are to bring down the rate of inflation.
The Government have been in office for 11 years. What is a medium-term financial strategy? According to the current Red Book, it will be another four years before inflation significantly reduces. It is the longest term medium-term financial strategy that I have ever known.
The proposed solutions are similar to what they were 10 years ago. The Government produced the figures for the money supply decreasing year by year until the magic year four years on. It is now four years on and the figures are the same. Who believes them now? The price rises in 1974, about which the Prime Minister makes something every Question Time, were due to the quintupling of oil prices.
Page 11 of the Red Book states:
Reductions in marginal tax rates have increased incentives to work and save, and improved the quality of investment.
I wish that were true. Not long ago I went to the opening
of a bank that had carpets up the wall. Another bank had leather lining the whole of its office space. Banks get the same investment and capital allowances as anybody who buys plant and machinery. They get a 25 per cent. reduction in the first year. Plant and machinery is worth more than that. That is the problem.
Page 11 talks about
A firm fiscal policy … Frequent … changes … are harmful.
I am not sure that that is so. The right hon. Member for Blaby pointed out that tax changes should be rare, and, presumably, always downwards. Why should he have that view about tax changes? What is so holy about them? Why should they not be used for short-term alterations in people's perceptions? Why should that be left to interest rates? We never heard such an argument previously. Perhaps the Chancellor of the Exchequer will deal with that.
The Chancellor has said that he does not want to reduce interest rates because he may have to increase them again. Why should they not be used in accordance with varying circumstances? We know that he believes in short-term changes, so why should he deny himself this particular opportunity? When in the Red Book he says that monetary growth is excessive with
too much money chasing too few goods,
it sounds suspiciously like demand management as I used to know it. Indeed, I cannot see any difference between that formulation and demand management. With all those qualifications for money supply, is there a monetary policy at all? It is like reading tea leaves. If we see a forest or a baby in the tea leaves, we can justify it. The justification for the money supply is the same.
My second question was whether it was a Budget for the economy or for the next election. It was a balancing act and I am not sure that the Chancellor will reach the end of the tightrope safely. In 1988 the goodies were handed out too early to the Government's friends. It is a pity that they were not handed out more fairly. It is normal to hand out goodies nearer to a general election. If the Government did that for political reason, they got it wrong, and if it was for economic reasons, they also got it wrong. The inheritance— the Chancellor is kind not to refer to it—meant that the boom came at the wrong moment.
With a deficit of £21 billion a year, we have to appear a safe haven for overseas borrowing. That meant a hard Budget, but with an election only two years away it also meant that politically the Buget could not be as harsh as those who lend us money would like. Therefore, the answer to whether this is a harsh Budget is that it is not hard enough for overseas investors, and the markets expressed their anxieties.
In his Budget statement, the Chancellor said:
I favour a strong exchange rate.
That is not a ringing declaration, if one is trying to calm the nerves of those who deposit money here. Overseas investors look at these matters day by day because they know that once that commitment is not expressed, it is time to withdraw their money.

The Chancellor of the Exchequer (Mr. John Major): I appreciate the graciousness with which the right hon. Gentleman makes his remarks. Is he aware that, although it is true that sterling fell the day after the Budget, it has since risen and is now higher than when I rose to deliver the Budget speech?

Mr. Sheldon: We must see first the amount of intervention by the Bank of England, and secondly, the long-term reaction of the markets as the Budget affects them.
In his Budget statement, the Chancellor said:
I am confident that the period of low growth will be short-lived—not least because of the permanent improvements in the underlying economy in the 1980s."—[Official Report, 20 March 1990; Vol. 169, c. 1011-14.]
Comparing 1979 with 1990, what are the permanent achievements? In the last full year of the Labour Government the balance of payments stood at plus £5 billion, whereas last year it was minus £21 billion. The non-visible balance is disappearing. In May 1979 inflation was 10·3 per cent., whereas in 1980 it was 21·9 per cent. That was not because of the quintupling of oil prices, but partly because of the doubling of VAT. Is there a permanent improvement? Inflation will increase to 9·5 per cent. as against the Labour Government's 10·3 per cent. Since the 1950s output has fallen only under this Government. In Tameside and Stockport we had 20,000 skilled engineers; now we have only 5,000. Questions about skills remain supremely relevant. Where is the permanent improvement?

Mr. Barry Field: Will the right hon. Gentleman tell us the productivity of those 5,000 engineers compared with the 20,000? In most cases they now have multiple-headed machines and computerised lathes which have increased output.

Mr. Sheldon: The difficulty is that total output has fallen in those engineering companies. Their output is not what it used to be. More important, companies are crying out for skilled engineers. There is a shortage.
If there is a permanent improvement in the standard of living, how is it achieved? North sea oil revenues are £85 billion which has an effect on the balance of payments. We have to borrow to maintain our standard of living and sell our assets—£5 billion a year—to maintain our standard of living. Is that a permanent improvement? What happens when there are no assets to sell? The average family paid 35 per cent. in income tax in 1979, whereas now it is 37 per

cent. Is that a permanent improvement? In 1979 unemployment was just over 1 million whereas today it is 2 million.
According to the Prime Minister recently, France is an economy to aspire to. In 1979 we would have been insulted if it was suggested that we should aspire to the French economy. We now find that, according to the European Commission and the Organisation for Economic Co-operation and Development, Italy has a greater level of production than Britain. Will we have to aspire to Italy? Are we going to continue to go down and to aspire to the performance of countries that we thought we had long since overtaken, in the 17th and 18th centuries? The permanent improvements, in the underlying economy which the Government boast about do not exist. Industry has suffered. There is no doubt that it has suffered in my constituency, and I feel it greatly.
If we had made those sacrifices for the benefit of permanent improvements, we could have borne them and accepted them willingly, but we find that the sacrifices have been in vain. We have wasted years and this Government will shortly come to an end.

Mr. Terence L. Higgins: I join those hon. Members who have congratulated my right hon. Friend the Chancellor on his presentation of the Budget. He is a new Chancellor, the Budget was being televised for the first time, and he had remarkably little scope for manoeuvre in the Budget, but he performed his task with considerable distinction and he put forward his proposals with great cogency. I join those hon. Members who have wished him well.
In his opening remarks the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) referred to a statement by the late lain MacLeod—with whom I had the privilege of sitting on the Opposition Front Bench and on the Government Front Bench before his untimely death—to the effect that if a Budget looked good on Budget day it was often viewed differently by Second Reading. He also said that it worked both ways, and that if a Budget did not look good on Budget day it might look better by Second Reading. Since my right hon. Friend's Budget was received with reasonable appreciation, it will continue to be so received in future.
I welcome a number of my right hon. Friend's proposals, in particular the abolition of the composite tax rate for building society accounts, which will mean that many of my poorer constituents who have previously been paying income tax in that form but in no other will no longer be subjected to it. Those people who ought to pay the full rate of tax will do so.
I welcome what my right hon. Friend the Chancellor said about savings and the proposals that he made on that subject. I also welcome the fact that he raised the lower threshold for income tax but not the higher rate threshold. That shows a regard for people on low pay, despite the fact that many people, in anticipating the Budget, did not believe that he would do such a thing.
I welcome the increases that my right hon. Friend has made in indirect taxation, particularly on tobacco and alcohol. On social grounds there is a case for that increase. Those taxes were not increased last year. My right hon. Friend has more than adequately coped with inflation since then. Also his action is a clear sign to the European


Community that we do not propose to go along with its proposals for the harmonisation of indirect taxation. My right hon. Friend's decision was a clear move in the opposite direction, and I welcome that because, as the Treasury and Civil Service Select Committee has pointed out, there is no argument for going along that road, particularly in regard to value added tax, to achieve the benefits of the single market in 1992. Therefore, the increase in indirect taxation should be welcomed as much for the implication of the change as for the change itself.
The major change taking place in the United Kingdom with the introduction of the community charge is in the system of local government finance—both in taxation and in expenditure. Clearly a number of anomalies exist that need to be straightened out in the light of experience. Some of them arise because local authorities have been given too much authority, for example, over the level of tax that should be applied to second homes. Some of the definitions of second homes have been nothing short of bizarre. Other anomalies need to be straightened out.
One matter which gives particular cause for concern is the substantial increase in local government exenditure. It is shown in the Red Book as a clear increase in the percentage of public expenditure in relation to gross domestic product, despite the fact that the estimate for GDP has been raised. That gives considerable cause for concern. It is uncertain to what extent the increase has been balanced by an increase in local government taxation in the form of the community charge, but its effects, in terms of controlling public expenditure, give cause for concern. Whereas previously the extra money would have come out of reserves, both expenditure and taxation are now increasing as a result of local authorities' actions. We have to consider that carefully. I hope that the Treasury and Civil Service Select Committee, when it studies the Budget and takes evidence from my right hon. Friend the Chancellor, will be able to consider that unfortunate development and its implications for the Treasury's control of the economy.
The community charge sets the context in which the Government's overall budget is made. The changes I have mentioned in regard to the community charge may have a significantly greater impact than the Budget. Protests about the community charge have had considerable publicity, and it has been extremely difficult for anyone to put over the positive case for the tax. I strongly believe that it is a much fairer tax than the old rating system. Previously only 18 million of the electorate of 36 million paid any local taxation, and that was unfair. The community charge is a significant improvement.
A slogan appeared outside my town hall a little while ago saying, "The duke and the dustman pay the same". That is not the case. People at the bottom of the income scale will have substantial relief from the community charge. People with higher incomes may pay just the community charge, but they will still pay far less than the cost of the services provided to the community by the local authority. That is not an unfair arrangement. More than the cost of local services will be paid by people who are better off, for the simple reason that, taking the country as a whole, only a quarter of the cost of the services comes

from the community charge, a quarter comes from business and something like a half from general taxation, which is levied on a progressive basis.
I hope that my right hon. Friend the Chancellor and his colleagues will be able to get across the fundamental arguments in favour of the change. Frankly, those arguments have not been adequately explained.

Mr. Alex Salmond: Will the right hon. Gentleman give way?

Mr. Higgins: No, because there is little time and I wish to make a number of other points.
On the Budget judgment, the way in which the grant system works also gives me grave concern. That is part of the problem. I greatly welcome the transition from rates to the community charge, but I have serious doubts about the way in which the grants system works. The change in local government finance is subject to Higgins first law of politics, which states that when there is any economic change the people who suffer will scream much louder than the people who benefit will cheer. That is a fact of political life and there is nothing we can do about it. However, we need to emphasise the fundamental case for the charge, and suggest that if people use local authority services they should pay something towards the cost. If people pay the community charge but not general taxation, they will still pay way under half of the cost of those services, but even that will improve accountability.
The Treasury and Civil Service Select Committee has had difficulty in finding suitable catch phrases for the Budget judgment. When the Chancellor of the Exchequer last appeared before the Committee, he suggested that he was a surfboarder in perilous waters. We have long used the analogy of balancing on a tightrope between inflation and recession. I believe that this time my right hon. Friend's Budget judgment was right. But not only is he on a tightrope; he is also on a tightrope in a very thick economic fog. This means that caution is an appropriate response.

Mr. Anthony Beaumont-Dark: Will my right hon. Friend give way?

Mr. Higgins: No. I am sorry, I do not have much time left.
The statistics upon which my right hon. Friend had to rely in formulating his Budget were in many ways seriously defective, in particular the retail sales figures. No one doubts that the high streets are considerably depressed by the action that my right hon. Friend has taken. That is, rightly, having an impact on the economy. However, it is not coming through yet in the statistics. That is creating real problems for him.
Apart from the impact of the change from rates to the community charge and the corresponding increase in public expenditure, the change is also likely to have an uncertain impact on consumption. Those who gain from the transition may save the proceeds, whereas those who now have to pay something towards the cost of local services will not have money to spend on something else. The precise impact on the economy is at this stage uncertain.
Finally, it is likely that there will be increased pressure on interest rates worldwide. Recent Japanese experience has suggested that that will be so. The transition in Germany, with the integration of the two currencies, may


also raise the general level of interest rates. In those circumstances, I doubt whether my right hon. Friend, who until now has, rightly, resisted further interest rate increases in the United Kingdom, will be able to continue to do so, if interest rate increases overseas are significantly large. If that happens, it will have a significant depressing effect on the United Kingdom economy.
Against the uncertain background that I have described, and in the face of this potential threat, if my right hon. Friend had introduced a tough Budget of the kind that some City commentators wished him to introduce, there would have been a serious risk that in two or three months we should have been driven into a severe recession, with considerable implications for output and unemployment. That would have been particularly dangerous, at a time when wage settlements continue to be significantly inflationary. The two opposing forces would project a conjuncture not dissimilar from that in 1980–81, when the consequences for unemployment were very serious.
My conclusion is that, in the circumstances, my right hon. Friend's judgment was right. On reflection, I believe that it will be recognised as having been a sensible judgment. It might have been much easier to introduce the Budget in three months' time, by which time many of the present uncertainties may have been resolved, but no Chancellor of the Exchequer has such an option. I hope, therefore, that the Treasury and Civil Service Select Committee will be able to investigate the matter in detail.
My right hon. Friend referred to the passages on funding policy in the Red Book. As the right hon. Member for Ashton-under-Lyne said, it is difficult to appraise just how tight or tough the Budget is and precisely what is the fiscal stance. At all events, however, we are still running, and are projected to run, a massive Budget surplus compared with previous times. It is important to take into account the fact that up to now the Government's policy of so-called "full unfunding" has meant that much of the money that was taken out of the economy has been put back by back-door means. With a surplus, therefore, my right hon. Friend has considerable scope for tightening the reins, if that seems appropriate in the weeks and months to come.
In all the circumstances, what my right hon. Friend has done is right. He has introduced many excellent specific measures, as well as taken an overall view of the economy, which is the right one to take in present circumstances.

Mr. Giles Radice: I am delighted to follow the right hon. Member for Worthing (Mr. Higgins), who is such an excellent Chairman of the Treasury and Civil Service Select Committee. I want to follow up what he said about the poll tax and the Budget judgment, but I shall not do so at the moment. I noted his remark about the Chancellor of the Exchequer being on a tightrope in an economic fog. If one is on a tightrope in an economic fog, there is a great danger that one will fall off. Perhaps the right hon. Member for Worthing was warning the Chancellor that he is about to fall off the tightrope.
I felt some sympathy for the Chancellor of the Exchequer when he spoke on Tuesday. By any standards, he has been dealt an exceptionally weak hand. He inherited from his predecessor an economy which is severely out of balance, with a high inflation rate, relative

to our competitors, a large balance of payments deficit and crippling interest rates. However, he was also faced with a difficult political situation. The Chancellor's dilemma was compounded by the Government's political plight. It is difficult to make the right economic decisions if one is already 20 points behind in the opinion polls, with only two years to go before the next general election.
Until last Tuesday I thought that the Chancellor, at least in terms of style, was not making too bad a job of it. Sensibly, he has adopted a demeanour that is far more appropriate to the current problems than was the brash approach adopted by his predecessor. The right hon. Member for Blaby (Mr. Lawson) was never a credible Chancellor of the Exchequer of the bad times. At least the right hon. Member for Huntingdon (Mr Major) has had the nous to admit that mistakes have been made, something which his predecessor could never bring himself to do. In contrast to the previous Chancellor, the right hon. Member for Huntingdon consulted relatively widely when preparing his Budget. However, we all waited to find out whether the Chancellor's economics were as good as his style. Sadly, his Budget proved to be a disappointment— so much so that on Tuesday it was rejected by the Scots, on Wednesday by the markets and on Thursday by the voters of Mid-Staffordshire.
The Chancellor would be able to shrug off the hostile reception as a short-term setback if he could convincingly demonstrate that his strategies are likely to be successful in the longer term. I very much doubt, though, whether he can. To be effective, the Chancellor's policies have to achieve the following objectives. They must slow down the economy, reduce inflation and shift resources from imports to exports without, at the same time, clobbering output and investment and undermining productive potential, thus leading to new unemployment. In the meantime, the Chancellor must keep the markets happy, despite our relatively poor inflation record, our very large balance of payments deficit and a very uncertain European and international situation. Finally, because the Chancellor is a politician, his policies must succeed enough for him to be able to present the voters with at least a passable prospectus in time for an election in late 1991 or in 1992.
My judgment is that the Chancellor's Budget strategy will not achieve those objectives. It will not do enough to get the economy back into balance, it will fail to satisfy the markets in the longer term, and, because it will continue the pain without producing satisfactory evidence that it is working, it will also be a resounding political failure. In short, we shall get the worst of all worlds.
The Chancellor's policy is flawed in three crucial respects. It relies far too heavily on interest rates; it is not supported—as was pointed out by the right hon. Member for Blaby (Mr. Lawson)—by a credible exchange rate strategy; and, as my. hon. Friend the Member for Sedgefield (Mr. Blair) said in a notable speech, it ignores the long-term requirements of the economy.
Like the previous Chancellor, the right hon. Gentleman has confirmed his faith in interest rates as "the key lever". However, the Chancellor's lever is a very blunt instrument. In his column in The Independent on Sunday yesterday, Christopher Huhne quoted Professor Paish's description, which is worth repeating:
It is like pulling a brick across a table top with a piece of elastic: nothing happens for ages, and then the brick hits you in the eye.
That is the problem with high interest rates. As we all know, there are also some unpleasant side effects on the way. Quite apart from the impact on mortgage holders, there are already signs that the welcome investment boom of the past two years is being choked off. Inevitably, mortgage rate increases will be reflected in wage bargaining, thus adding to the inflationary spiral. In other words, the result of slowing down the economy through high interest rates is likely to be unpredictable and disruptive.
There is a case to be made for alternative monetary measures. The Chancellor is belatedly urging the financial institutions to restrain their marketing of credit facilities. It is about time. Page 18 of the Red Book contains a note on the practice in France and Germany of imposing minimum reserve asset ratios.
However, the case that I wish to make concerns not the alternative monetary arrangements, but the fact that the Chancellor should have been prepared to use fiscal policy in his Budget. Like his predecessor, the Chancellor says that he is against fine tuning. I suspect, however, that his apparent opposition in principle amounts to little more than a debating point. Despite the previous Chancellor's unprovable assertions about the improvements to the supply side, he was not averse to some fiscal fine tuning in the form of tax cuts in the run-up to the 1987 election—or, indeed, in 1988.
A more serious counter-argument is that the economy is already heading towards recession, which was the point made by the right hon. Member for Worthing. A tighter fiscal stance, it is argued, would merely pile on the agony, and it is better to wait and see what happens. That appears to be the Chancellor's strategy. In my view, such fiscal Micawberism is mistaken. Like the right hon. Member for Worthing, I predict that the Chancellor will be forced to raise interest rates again quite soon, partly in reaction to what is happening in Germany and Japan. That would be disastrous. A further rise in interest rates will clobber the real economy and bring in its wake precisely the recession that the Chancellor says that he is trying to avoid.
If the Chancellor had been prepared to act on the fiscal front in the Budget, he would have been in a better position to resist recession in the coming months. Even a modest increase in the tax take—between £1 billion and £2 billion—would have been a psychological signal both to the market and to consumers. And, because it would assist in dampening demand directly, raising taxes would help pave the way for a reduction in interest rates at the right time, and thus relieve pressure on companies and enable them to concentrate on winning orders in export markets. In that way it would be possible to maintain output, investment and employment, while at the same time bringing the economy back into balance more speedily by reducing inflation and cutting the trade deficit.
I suspect that the real reason why the Chancellor did not feel able to raise the overall yield from taxes by more than £500 million was that the Government have almost totally lost their political authority. An administration who were foolish enough to introduce the uniquely unpopular poll tax this year could not afford at the same time to increase national taxes.

Mr. Ashdown: I have listened to the hon. Gentleman's speech with some interest. He is making more sense from

the Opposition Back Benches about what the Government might have done than any Opposition Front-Bencher whom I have heard. Can he tell the House whether raising taxation is Labour party policy?

Mr. Radice: I was speaking for myself; I do not commit my Front Bench. It is easy enough for the right hon. Member for Yeovil (Mr. Ashdown) to speak for himself, because there are not many people behind him; indeed, at the moment there is no one alongside him. There are proposals in Labour's alternative Budget to raise taxes—for instance, on company cars—such as the Chancellor introduced. There are also some green Budget proposals—

Mr. Major: In not committing his Front Bench to anything the hon. Member for Durham, North (Mr. Radice) is wise, and he is following precisely the practice of his own Front Bench. I have here a quote from a distinguished economic correspondent, who said that my
decision to go for a broadly neutral budget was finely judged, but a good one.
The extra £1 billion or so of fiscal tightening the City had been calling for would have made little difference … Major was probably right to resist such tightening, which would have been fine-tuning of the worst sort."
That was written in yesterday's Sunday Times by Professor David Currie, who has from time to time advised the Labour party Front Bench.

Mr. Radice: Different advisers give different views. In the Treasury Select Committee we have a wide range of advice from advisers giving different views on different matters, but the majority of commentators argue that the Chancellor should have taken tough fiscal measures in his Budget.

Mr. Nicholas Budgen: The question is whether the Government are prepared to use any of the weapons available to them. If the view is taken that for political reasons the Government are not prepared to use the interest rate weapon, it may be necessary to use a less attractive weapon, namely taxation.

Mr. Radice: I entirely agree. We must get away from the mumbo-jumbo that says that the fiscal weapon cannot be used in the short term. That is the doctrine enuciated by the previous Chancellor, and it is wrong. It is time to get away from it. We must examine the position seriously, which is what I have been trying to do.
The Chancellor ducked the issue because he lacked the political authority. This was primarily a political and not an economic judgment.

Mr. Robert Sheldon: It is No. 10.

Mr. Radice: It may be No. 10.

Mr. Budgen: Will the hon. Gentleman give way?

Mr. Radice: I will not give way. I have already given way four times, which is unusual for a Back Bencher.
The Government's lack of authority is also a problem in financial markets. Most City commentators—rightly, I think—expect the value of the pound to continue to drift down during 1990. As the right hon. Member for Blaby said, that will make it more difficult to reduce inflation.
If the Chancellor had been able to announce that Britain would be joining the exchange rate mechanism in the near future, he might have been able to keep the pound steady over the next few months. However, as everyone


knows, the Prime Minister has veteod British membership. I do not know whether she will gradually succumb to pressure from the Chancellor and his right hon. Friends over the coming months. She may, or perhaps—as the right hon. Member for Yeovil suggested—it will be necessary to get rid of the Prime Minister before changing the policy. Only the Conservative party can answer that conundrum.
British membership of the exchange rate mechanism is not a panacea, but it would greatly assist a British Chancellor to maintain a stable exchange rate in difficult circumstances. It would also provide a useful counterinflationary discipline for both industry and Government. In time, as our inflation rate came down to nearer to the German level—as the French rate has done—it would probably lead to a reduction in interest rates as well. So it would have positive advantages and the sooner we join the better.
The Chancellor's strategy also ignores the long term. Apart from a token gesture towards training, neither the Autumn Statement nor the Budget offers anything constructive to improve education and training, to strengthen our research and development or to reduce our regional imbalance. Yet the skill, research and all-round effort of people in the north as well as in the south represent the real supply side of the economy. As my hon. Friend the Member for Sedgefield said, we neglect those areas at our peril. I suspect that this year's Budget will be remembered—if it is remembered at all—as a short-term Budget with short-term objectives by a short-term Chancellor.

Madam Deputy Speaker (Miss Betty Boothroyd): Order. We are now into the 10-minute limit for speeches and wise hon. Members should keep an eye on the clock for themselves so as not to allow the Chair to ruin the last minutes of their speeches by the inevitable guillotine that will be imposed by me.

Sir Peter Hordern: Every Opposition Member who has spoken has suggested increasing the rates of income tax. I know that that is the result of their experience in government as that was their custom, but there is one considerable difference between the position today and that under successive Labour Governments: we do not have a financial deficit; in fact, we have had a substantial financial surplus for the past two years, and that is unique in the experience of the past 20 years or longer.
The case for increasing income tax has not been made because our position is fundamentally different. Moreover, my right hon. Friend the Chancellor was not averse to putting up taxation, because, as hon. Members have recognised, he raised the excise duties by more than the rate of inflation. That does not show any lack of authority, still less any lack of courage, on the part of my right hon. Friend.
I know that many in the City felt that the Budget should have done more to take demand out of the economy, and many of them sought increases in direct taxation. I recollect that 365 economists wrote a letter to The Times in 1981, after the Budget of my right hon. Friend the Leader of the House, saying that it would result in rapid inflation, but they were all proved wrong. The proposition put forward by those in the City and by economists that we

should have taken more out of the economy by increasing direct taxation was also wrong. I do not believe that we have a choice between increasing direct taxation and reducing interest rates. Our interest rates are extremely competitive, and it is by no means certain that had we increased taxation we should thereby have been able to reduce interest rates later. I very much doubt whether that would have been the case. One has only to look at what is happening now in Japan, and to a similar extent in West Germany, to realise the truth of that observation.
I do not know what the House thinks will happen as we all have different views, but I suggest that the demand for money in eastern Europe will be extremely large in the foreseeable future. The effect of that demand will be similar to the large transfer of resources that occurred during the last hike in oil prices when so much money went to the middle east. It is no longer the case that we can envisage a gradually growing world economy in which interest rates accommodate a flow of money from surplus countries to debtor countries. There is bound to be a huge demand for money and for funds which will be attractive to investors all over the world. That brings me to the exchange rate mechanism.
The conditions we have set for joining the exchange rate mechanism are that the French and Italians should discard capital controls and that we should more nearly approximate to the rate of inflation and the interest rate in West Germany. Naturally, many people consider that that will happen over a period in which our inflation rate falls and our interest rate falls with it, but I suggest that, because of the extra demand for funds in eastern Europe, interest rates in West Germany are likely to be rather higher than one would normally expect as perhaps will be the rate of inflation, for however temporary a period. West German interest rates at 9·5 per cent. for long-term funds are extremely high, historically speaking, and it is by no means certain that the limit has yet been reached. So, by a curious twist which was in no sense expected, the convergence between our inflation rate and interest rate and those in West Germany will now occur because the West German rates are likely to increase and we expect ours to fall somewhat.
We must also consider the effectiveness of our monetary controls. I must tell my right hon. Friend the Chancellor that I have enthusiasm for almost every part of the Budget save only that part dealing with monetary policy. It may well be that I am shamefully out of date in these matters, but MO does not register with me as an indication of anything except for banks and notes in circulation and as a snapshot of the economy at any particular moment.

Mr. Budgen: Will my hon. Friend give way?

Sir Peter Hordern: No. I have very limited time.
We should have proper monetary targets for broad money and for narrow money, as almost every other European country has, and we should stick to them. It is not difficult or impossible to do so if the will and determination are there, although I accept that many sacrifices will have to be made. It is no use thinking that the exchange rate mechanism is an alternative to strict monetary policy. It is no such thing.
I recognise that Britain has to face peculiar difficulties as it is the centre of so many money movements across the exchange rates and has such a wide comprehensive


financial market. However, it would be of great benefit to Britain if we were to have a separate and strengthened Bank of England responsible for monetary policy. I have thought that for some time, and I hope that my right hon. Friend will be able to pursue a study which I understand my right hon. Friend the Member for Blaby (Mr. Lawson) set in train.
I wholly congratulate my right hon. Friend the Chancellor on scrapping the composite rate of tax for depositors in buidling societies and for creating the new tax-exempt special savings account. I understand that £1,000 billion out of a total personal wealth of £1,860 billion is tied up in housing. Although I defer to nobody in my enthusiasm for the property-owning democracy, so much of our personal wealth being stored in bricks and mortar is not producing the supply-side revolution of which Britain is capable. I should like relief similar to the £30,000 mortgage taxation relief for those who want to start a personal savings scheme or to encourage entrepreneurs to set up in business. Taking the long-term economic view, I think that it does not make sense to freeze such a large proportion of our national assets in this way. I do not think that it is done in other countries to anything like the same degree. If one looks at the matter independently and in a reasoned way, one can only come to the conclusion that the proposition that we ought to set out to achieve such a situation is very strange.
There is competition for money because of the demand for investment in eastern Europe. That demand will certainly be met. We can expect to see in eastern Europe an increase in productivity and in production such as has not been seen since the start of the industrial revolution in the United States, when hundreds of thousands of people moved from western Europe to set in motion the biggest industrial revolution of all time. We have in prospect an economic revolution limitless in scope such as we have not seen since the beginning of the European Community. With wider European boundaries, we in western Europe can expect to see a substantial improvement.
I congratulate my right hon. Friend on his Budget, and wish him success.

Mr. Denzil Davies: The hon. Member for Horsham (Sir P. Hordern) has made a very interesting and a very sensible speech. Unfortunately, because of the time limit, I am unable to respond to many of his arguments.
The Government have been desperately anxious to describe this as a tough Budget. Treasury Ministers repeated the phrase with Pavlovian predictability. The current Leader of the House, who was the first Chancellor of the Thatcher era, and has now acquired something of a reputation as a bull terrier of monetarism, was wheeled out a few days before the Budget to say in a speech that it was likely to be a tough Budget. I wondered at the time how he knew. I know now that he did not know. In fact, it seems that he was fed some dud information.
This is a timid Budget. I am sorry to say that it is the Budget of a frightened Chancellor. I do not blame him for being frightened. He is frightened by his economic inheritance—if "inheritance" is the right word—he is frightened by his Back Benchers, and, quite properly, he is frightened by the British electorate. The Tory party was

elected in 1979 mainly to defeat inflation. This it has failed abysmally to do. At the moment, inflation, as measured by the RPI, stands at 7·5 per cent., and it will probably go up to 9·5 or 10 per cent. in the next few months. That is three times as high as the rate of our principal competitors in Europe—France and Germany. The French have managed to get their inflation down almost to the German level. But the rate in Britain is three times as high as the average for the seven major economies of the world.
The Prime Minister owes the British public an explanation, but they will not get it. The right hon. Lady really ought to explain to the British public why her Government, having invested so much in the defeat of inflation, cannot do as well as the French, the Germans and our other competitors. Perhaps when she next goes to the EC Council of Ministers the Treasury could arrange for her a little seminar with Chancellor Kohl of the Christian Democrats and President Mitterrand of the French Socialists. They know the trick; perhaps they could explain how what they have done might be done in Britain.
The Budget has all but abandoned monetary targets and has loosened an already-loose fiscal stance. All monetary targets, except little MO—notes and coins in circulation—have been jettisoned. Indeed, the range of increase in MO this year is to be the same as for last year. Although, according to the last Budget, the range of increase was to be reduced from I to 5 per cent. to 0 to 4 per cent., it is above the 1 to 5 per cent. range already. Even last year it was above 5 per cent. Does anyone seriously believe that if, over the next few months, the Chancellor sees MO again exceeding the target of 1 to 5 per cent. he will increase interest rates? Of course he will not. The pound may go down. At the end of the day, interest rates would be increased to stop a run on the pound. But if the pound goes down slowly and gradually, the Treasury will sit back. There will be benign neglect. If it looks as if the slide is getting out of control, the reserves will be thrown at it. Ultimately, if the reserves do not do the job—because they are running out—interest rates will go up. But only then will this Chancellor put interest rates up. Only then will he use monetary methods.
As a result, I do not see that the Government have any alternative, on the monetary side, to eventually joining the exchange rate mechanism of the EMS. To put it brutally, that means allowing Herr Otto Poehl of the Bundesbank to run our monetary policy. The Prime Minister may not like it. She may kick and scream, but she will have to accept it. In the end, she will have nobody but herself to blame for the failure, over 10 years, to establish a proper and sensible monetary policy.
Then there is fiscal policy. The Chancellor tells us that fiscal policy is meant to bolster—I think "bolster" is the word he used—monetary policy.

Mr. Ted Rowlands: It was "buttress".

Mr. Davies: I was about to say that it was a pretty soft bolster; perhaps I should say, instead, that it was a pretty thin and wobbly buttress.
So far as I understand it, the Government define fiscal policy as comprising three elements: the budget surplus, tight control of public expenditure, and taxation policy. Let us look at the budget surplus. It, too, is beginning to look pretty wobbly. In the last financial year it was supposed to be £14 billion, but it turned out to be £7


billion. In the next financial year it is to be £6·9 billion. But if the privatisation proceeds are taken out of that—and there is a very good case for doing so—the figure is down to £1·9 billion. Apparently it will disappear altogether in the following year. So that element of the triad of fiscal policy does not look too sound.
Let me come now to control of public expenditure. As many commentators, including Mr. Gavin Davies, of Goldman Sachs, and others have pointed out, things are not looking too good on that front either, in respect of the medium-term strategy. On the basis of forecasts of last year, public expenditure over the next three years will be up by £7 billion, £9 billion and £15 billion respectively. That is a total of £31 billion. But it is not real resources, not real money. Those are inflationary increases. So things do not look too good even on the public expenditure side of this fiscal policy.
On the taxation front, the Budget raises an extra £430 million. When the £1 billion that is already going back into the economy, as a result of independent taxation, is taken into account, we have a minus figure. So the fiscal stance is not very tough. It does not seem to buttress very well the monetary policy, which itself is a shambles.
The Chancellor and the Government are now in a very tight corner—and the Chancellor knows it. If he introduces tough measures to get inflation down, the next election will be lost; if he does not introduce tough measures to get inflation down, the next election will be lost anyway. He is in a corner, and he cannot get out of it.

Mr. Major: What would the right hon. Gentleman do?

Mr. Davies: Opposition Back Benchers do not have to make recommendations. Indeed, I commend the Opposition Back Benches to the Chancellor—it is a very comfortable place.
The present Government have had one of the easiest and most favourable 10—year periods since before 1914. They could have used those 10 years to build a foundation for the much more difficult 10 years that Britain will face in the 1990s. They neglected to do so, and for that reason, if for no other, they deserve to lose the next election, and they will do so.

Mr. Barry Field: The point made by the hon. Member for Sedgefield (Mr. Blair), who, unfortunately, is no longer present, about short-termism was entirely answered last week by my right hon. Friend the Chief Secretary to the Treasury. He pointed out that since the war we have had 17 years of Labour government and 27 years of Conservative government. Under Labour Governments, our living standards increased by 14 per cent. and under Conservative Governments by 78 per cent. There could not be a better indication of how the fiscal and financial policies of Conservative management have brought achievements of lasting benefit to our nation.
The abolition of the composite rate of taxation is welcome. It will benefit the lowest paid in society, who hitherto have been prevented from recovering the tax that they pay on building society accounts. They find such accounts useful and convenient places to deposit their money. It will also be of much benefit to children and grandchildren. More than a few grandparents have opened

accounts for their grandchildren, and hitherto they have been prevented from recovering the tax paid on those accounts.
My right hon. Friend the Chancellor said that he is mindful of the administrative and enforcement problems that abolition of the composite rate will create. Having been a director of a building society, I should point out to him that, annually, building societies send a voucher of the interest paid to each account holder. I cannot see why that should not become a tax credit voucher, which would minimise the administrative disruption that abolition will cause the Treasury.
I was pleased to hear my right hon. Friend the Chancellor express concern about how the credit and finance institutions have encouraged people to take on further debt. At a recent meeting, the archdeacon of the Isle of Wight, Tony Turner, told me that he had monitored the amount of unsolicited mail that he had received in the past year. He received 41 letters, all encouraging him to get deeper into debt. That is a matter of considerable concern, and I have suggested to my right hon. Friend that the finance industry should make some contribution to debt counselling agencies. That would be particularly welcome, and I do not think that there is a downside to that suggestion. Brewers make considerable funds available for alcoholism counselling. No one suggests that the brewing industry causes alcoholism, so I do not see why the finance industry should not make some contribution to debt counselling.
The point made by the hon. Member for Sedgefield about training in British industry is entirely answered by an article in The Echo on 13 March. Its headline read "Open Doors for Women". It announced that an additional 400 jobs will be created for women in my constituency by—and this is a name to be conjured with within the Conservative party at the moment—Westland Aerospace. It has £16 million worth of new orders from
McDonnel Douglas of the USA, Dornier of West Germany, and Hispano Suiza, part of the French based aero engine group.
The tax allowance on training and enterprise councils and the concession for women on workplace nurseries will be welcomed. Curiously, the abolition of VAT on inshore rescue particularly affects my constituency. The Royal National Lifeboat Institution builds all its inshore rescue craft in my constituency and employs many women in its factory at east Cowes.
I should not like to congratulate my right hon. Friend the Chancellor on making a tax concession for TECs without placing on record my grateful thanks to my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) for granting my constituency a TEC. My constituency fell outside the original parameters for TECs, but his intervention and representations from industrialists led to that decision being made.
Will my right hon. Friend the Chancellor solve a long-running conundrum about national savings? I have no ideological problem with national savings, but, having been a director of a building society and a member of the Conservative party all my life, I cannot understand how we believe in the free enterprise economy but continue to have a state mechanism for savings. Perhaps my right hon. Friend will sit me down on his knee and give me a cup of Treasury cocoa—

Mr. Major: I shall certainly give my hon. Friend the cocoa.

Mr. Field: My right hon. Friend might not like what I am about to say. I noticed buried in the Budget a requirement to fall in line with EEC legislation and to allow EEC tax inspectors access to information on my tax affairs. I cannot accept that a Sicilian tax inspector, with all his Mafioso connections, is an ideal candidate to receive information from the Inland Revenue. This morning, I was told by chief valuation officers of the Treasury that they are unable to obtain information from the Inland Revenue when considering valuations based on profit. It is a cornerstone of our constitution that Inland Revenue information is not passed to others. I view with the greatest alarm the prospect of an Inland Revenue inspector, or his equivalent in Sicily, being aware of the returns of hon. Members.
I am pleased that my right hon. Friend the Chancellor has addressed the problem of companies' dual residence. He will not allow companies to escape capital gains tax by claiming to be resident here but operating from another country. In future, will that prevent the highly geared bid that we saw for DRG and other companies? If so, that will be a welcome aspect of the Budget that has not been highlighted by the financial press.
On 13 March, in response to a written question, the Treasury told me that the yield from stamp duty on a regional basis was £145 million in 1985–86 in the south-east, with an average house price of £46,392, and that by 1988–89 it had increased to £360 million on an average house price of £80,249. The housing market is the means to unlock skills and to allow greater mobility in society. Given those variations in yield, there must be a case for regional stamp duty. That would be an unexpected windfall.
In the current political climate, it may be unpopular to say in the House that the hike in mortgage rates is understandably translated into votes and electoral prospects. One of the Government's great achievements has been to make 65 per cent. of the nation home owners. However, the point that has been missed is that mortgage rates are a good regulatory mechanism against inflation. Literally thousands of pounds have been taken out of the economy and taken away from people's purchasing power, which has a far more deflationary effect than anyone has yet realised.

Mr. Brian Sedgemore: Shortly after what has just been described as the Chancellor's Sicilian Budget speech, one of my colleagues said that he had admired the simplicity of its language. With characteristic generosity, I replied, "Yes, it would be churlish not to recognise that the Chancellor found that point at which ignorance and simplicity converge. Don't you think it was a pity that the steps which he outlined to deal with the immense problems facing the British economy were inversely proportionate to the tedium and length of his 75-minute speech?"
The Chancellor's lack of understanding in his slight, irrelevant Budget was adroitly summed up in an editorial in that rabid Tory newspaper the Evening Standard on 21 March. The editorial writer said:
the Budget is unlikely to make any significant impact on the increasingly severe economic problems which Britain now faces. The Chancellor's silences in this regard are worse than embarrassing: they are dangerous. Part of Mr. Major's Budget Judgment sounded like extracts from a student's essay in 0 Level economics.

In like manner, on television yesterday, the Chancellor referred to
constant waves of demand causing inflation".
I find it disturbing to have to listen to such juvenile Keynesianism from a Chancellor of the Exchequer.
The markets did not like the Budget and within hours of it they signalled their horror by pushing the pound down to its lowest ever level against the mark. Despite the Chancellor's intervention, it can be only a matter of months before the markets wreak their retribution on the Budget and he will learn, like other Chancellors before him, that those who live by the markets die by the markets.
The pundits were equally contemptuous of the Budget. Christopher Johnson, the chief economic adviser to Lloyd's bank, said that the Budget
may not be enough to prevent the pound falling and interest rates rising as inflation rises to nearly 9 per cent. next month.
In the UBS Phillips and Drew Budget special, Bill Martin was merely accentuating the obvious when he observed:
1990 goes down as Major's annus miserabilis.
He added that the Chancellor had a major credibility problem. Kevin Darlington and Joe Roseman finished their article in the UBS Phillips and Drew Budget special by stating:
The implications for John Major are obvious. If the economy does not stagnate this year, he may well not be in a position to restore the government's reputation for competence in economic management in time for the next election. The electorate may then conclude that Mr. Smith offers a more palatable alternative.

Mr. Major: I shall not take up too much of the hon. Gentleman's time, but since he quoted Phillips and Drew, I shall also quote that firm, which said in the middle of February:
The latest indicators suggests that policy is delivering the sharp demand slowdown necessary to take the inflationary sting out of the economy.
If that was true then, it is even more true today.

Mr. Sedgemore: I shall come to just how much sting has been taken out of the economy, but it is clear that, post-February, Kevin Darlington and Joe Roseman are hedging their bets. If I were a gambling man, I would do exactly the same. They realise that the economy is suffering from the irresponsibility of the previous Chancellor and the present Chancellor.
There has been a vertiginous collapse in the growth of overall domestic demand in the economy, from a peak of 10 per cent. in early 1988 to minus 0·5 per cent. by the end of 1989. That is bound to take us back to increasing unemployment and cuts in real wages. That is the horror story of the Budget.
Budget 1990 also gives the lie to the Tory claim that it is the party of sound money and stable prices, which believes that the currency should represent a store of value, because it shows that it is the party of unsound money. The pound in everyone's pocket will be diminished by the Budget. Above all else, the Budget is inflationary: it is a Budget of inflation, by inflation, for inflation. The Chancellor has got us to the top of the inflation league and intends to keep us there.
It is extraordinary that a Government whose first priority was to bring down inflation saw the annual increase of 13 per cent. in 1979 soar to 18 per cent. in 1980 and touch 22 per cent. on a year-on-year basis. After a temporary blip in 1986, inflation is about to rise to 9 or 10


per cent. on a year-on-year basis. That is the cause of the Chancellor's credibility gap. It is also a sad epitaph for the Mickey Mouse monetarism of the past 10 years.
I understand that there is now a conflict between the Treasury and the Bank of England over the future of monetarism and the monetary aggregates. The bank is still keen on them but, for the Treasury, the Chancellor says that MO is up the spout, MI is down the shute, M2 is in a corner, M3 is in a jam, M4 is on the run and M5 is out of sight. Although the Chancellor set a target for MO, he has said that it will be ignored, and should MO come within the target range, that will be pure accident and nobody will be more surprised than him.
The Chancellor now says that he will replace monetary targets with an even more ludicrous concept, a highly abstract artifice which he deigns to call "his judgment". To paraphrase Christopher Fry, the Chancellor's critical judgment is exquisite, it leaves us with nothing to admire except his opinion, and that, as we all know, is worthless. Those of us who are members of the Select Committee on the Treasury and Civil Service know that the Chancellor's judgment on the size of the balance of payments deficit was mindbogglingly in error. We also know that his judgment on inflation was wrong, like that of other Treasury Ministers over the past five years.
The Chancellor managed to keep a straight face when he introduced the Budget by telling us that it was fiscally neutral. What nonsense! What tripe! We are told that the medium-term objective is a balanced budget, yet that objective is set to be reached by 1992–93, at least a year earlier than envisaged in the 1989 Budget, and the public sector debt repayment objective for this year and next has been halved. That is a major relaxation of fiscal policy in every conceivable sense.
The Budget shows that the Tory party is not only the party of high inflation, but the party of high taxation. Paragraph 2.50 of the Red Book states:
The Government's objectives for taxation are to reduce tax rates and bring down tax as a percentage of GDP.
However, table 2.5 describes North sea taxes, national insurance contributions and the community charge as a per cent. of non-North sea money GDP. It states that in 1978–79, taxes under Labour, as a percentage of GDP, were 34 per cent. By 1981–82, they had rocketed up to 38·5 per cent. They are projected for 1990–91 to be way above their level under Labour, at 37·75 per cent. Looking as far as the human eye can see, to 1993–94, they are projected to be way above what they were under Labour, at 36 per cent.
We see that Labour is the party that lets people spend their own money and the Conservative party is the one that taxes us to death. If, as some Conservative politicians argue, taxes are theft, the three biggest crooks in this country in the past 20 years have been the last three Conservative Chancellors of the Exchequer. The present Chancellor is almost certain to win the Ronald Biggs award for daylight robbery.
When the Chancellor introduced the Budget he was extremely sad that he had three cheap paragraphs on international monetary relations. He talked as though Britain was a self-sufficient island and told us nothing about the problems of the American, Japanese and German economies and the impact that they would have on the British economy. He did not consider the problems of the big world surpluses.
The Japanese surplus is disappearing and West Germany's surplus will almost certainly have to be used to

finance investment in East Germany. How will the international monetary system be able to pay for the big British deficit and the huge American deficit? It is an astonishing shame that the Chancellor did not have the vision or depth of understanding of the world's monetary problems to address those issues.

Mr. Michael Morris: It would have been more honest for the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) to give the percentages of direct taxation rather than the total taxation figure. If he had done so, he would have found that the Conservative party believes in reducing direct taxation and the percentage figures would have demonstrated that amply in comparison to the Budgets presented by Labour Chancellors.
It is interesting to note that Opposition Members suggested that there should be an increase in direct taxation, but they said that they were worried about the prospects of a recession. There is no more direct way of producing a recession than to increase direct taxation. It was surprising that the hon. Member for Durham, North (Mr. Radice) and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), both of whom I respect, and both of whom represent industrial constituencies as I do, should suggest such a policy.
I congratulate my right hon. Friend the Chancellor of the Exchequer on bringing a few smiles to the Government Benches. For once there was a clear strategy which hon. Members and also the public could understand. I found it particularly refreshing last weekend to visit my constituency, talk to my constituents and find that they understood what my right hon. Friend the Chancellor was about. I am a mere politician who once read economics. The City scribblers quoted ad lib by the hon. Member for Hackney, South and Shoreditch may deal in the City, but perhaps they have not read economics.
My right hon. Friend the Chancellor faced three different scenarios when he wrote his Budget. Under one scenario, interest rates are kept high enough to bring inflation down steadily. Fiscal policy could be tightened only gradually and personal savings were not going to increase. Under that scenario, we would surely have had a sag in domestic investment. The current account balance would have improved a little, but as the domestic recession took hold, we would have become uncompetitive and there would have been a reduction in our exports. My right hon. Friend rightly rejected that scenario.
Under another scenario, fiscal policy might have been tightened only gradually and personal savings might not have increased very much. Under that scenario, the market might have concluded that more investment was needed and that the Chancellor would give way and reduce interest rates and that that would gradually depreciate the currency. Again my right hon. Friend rejected that scenario.
My right hon. Friend chose a scenario with which some economists find favour. He decided that there should be a marginal tightening of fiscal policy which should be accompanied by an increase in the savings ratio. The one message to come from the Budget is that the Chancellor is going to have a real crack at increasing the personal savings ratio and my colleagues have congratulated him on what he has done in that respect.


The introduction of TESSA will come about when the Chancellor hopes that interest rates will begin to fall. Under that strategy personal savings should increase when perhaps interest rates will come down and people will have marginally more money to spend. I believe that that strategy is absolutely right.
One of the fundamental planks of my right hon. Friend's policy was to see exports continue to increase. That is right. The hon. Member for Sedgefield (Mr. Blair) suggested that our share of world trade is declining. However, he did not paint a true picture. We are holding our share of world trade and over the past 18 months that has increased marginally. While it is true that the pound has depreciated, particularly in relation to the deutschmark, and that helps exports in the short term, we must ask whether we are doing enough.
My right hon. Friend the Chancellor should call for a report from the Department of Trade and Industry. While he may be considering the macro side of exports, there is something going on at the DTI which may affect exports adversely. The DTI has chosen June as the time to bring about an overhaul of the Export Credits Guarantee Department. For medium-term credit insurance, particularly against the riskier markets, but against all markets in general, there will be an increase in premiums. This is not an opportune time at which totally to revamp the ECGD. There is also a proposal within the reforms that there should be a restriction on geographical markets where we already have heavy exposure on the accounts of the ECGD. This is not the right time for that kind of exercise.
My right hon. Friend the Chancellor is determined that the balance of payments deficit will be no more than £15 billion. To achieve that, good sound export insurance is vital. It is not good enough to suggest that we will negotiate with the Commission to ensure that the Italians, French and Germans come into line. We want to ensure that they are in line before we alter any of our dimensions.
Five conditions were laid down at Madrid for our entry into the European monetary system. It is clear that four of those conditions will broadly be met by the autumn of this year. I hope that my right hon. Friend the Chancellor will be brave and recognise that we must move forward and enter for positive reasons. It is good for a Budget to anticipate change and help it along. I believe that we have had a major Budget, but in a minor key. The Budget is very much a turning point.
It is too easy to forget that sentiment and attitude are key factors that affect the financial and political markets. I feel that my right hon. Friend has pitched his Budget absolutely right. It is reassuring to find that at the grass roots, in our constituencies, people understand the strategy and know what is going to happen. In response to the sceptics on the Opposition Benches, anyone who has been to the City over the past day or so will see that the views have changed from the immediate reactions to the Budget. The general view of economists in the City now is that my right hon. Friend the Chancellor has got it about right, and I congratulate him on that.

Mr. Alex Salmond: The House will expect me to say something about the Budget storm that descended on the Government on the question of poll tax savings limits, and I would not wish to disappoint the House.
The political position of the Secretary of State for Scotland has been fatally weakened by the events of the past week for four reasons. First, the events demonstrate the marginal position that he occupies in Cabinet. He was not even consulted about the change before the morning of the Budget. Secondly, the Secretary of State for Scotland was completely unprepared for the change that the Chancellor was about to announce. He was so dozy that he did not have the wit to speak up in Cabinet last Tuesday to insist that a caveat was inserted in the Budget speech to take care of the Scottish position. Thirdly, the Secretary of State's position is damaged because of the insensitivity with which he greeted the outcry from Scottish Members of Parliament, describing our indignation for a full 24 hours as a matter of "bogus" political point scoring. Fourthly, there was a craven surrender within the next 24 hours as the Secretary of State for Scotland scrambled desperately to save his political skin.
Given this demonstration of political weakness by the Secretary of State for Scotland, it was all the more remarkable to see him reinterpret the past week in the Scottish Sunday press as an example of a macho Secretary of State for Scotland boldly defending Scotland's corner in the Government. In the immortal words of Zsa Zsa Gabor, men who claim they are macho usually aren't mucho. So it is with the Secretary of State for Scotland.
The Sunday papers made interesting reading. We had a bold statement, described as a "declaration of political independence," from the Secretary of State when, according to The Observer, he said:
I came into politics before Mrs. Thatcher became leader of the Conservative Party and no doubt I will still be in politics when she is no longer leader of the party.
However, an article in the Glasgow Herald this morning states:
Mr. Rifkind said all he meant was that he was 43, and the Prime Minister was 63".
That is a rather ungallant climbdown from the tough comments over the weekend. In the same article in The Observer the Secretary of State for Scotland declared that, on poll tax capital limits, the Prime Minister
has fallen into line with my better judgment.
Yet again this morning the Secretary of State backed down from that rather rash remark by saying that it was "a frivolous reply to a frivolous question".
Having suffered mental paralysis last Tuesday when the issue arose, the Secretary of State for Scotland is now in a state of schizophrenia. He cannot decide whether he is macho man defending Scotland's interests to the Government or macho mouse defending the Government's interests to Scotland. For some understanding of the Secretary of State's mental condition, I advise hon. Members from English constituencies to read a column in today's edition of the Glasgow Herald in which Mr. Brian Meek, who is a leading Scottish Conservative and probably the Secretary of State's foremost confidant, gives some advice to his friend. The article states:
Malcolm, however, would do well to remind the electors from time to time that he is not Mrs Thatcher's monkey. In fact she needs him a lot more than the other way round.


Mrs Thatcher is beginning to look increasingly mortal, and there is no need for any Cabinet Minister to be rubbished by her or by Mr Bernard Ingham. He will not be around the day after she departs.
One difficulty for the Secretary of State for Scotland is that there is a great deal of material from the past week for Mr. Bernard Ingham or anyone else in Downing street to rubbish. One such example appeared in yesterday's edition of the Sunday Mail. An article describing the poll tax climbdown states:
an aide to Mrs. Thatcher said: 'If Malcolm Rifkind can find money from within his own budget to solve a political problem, he can do that.
'You (the Scots) have got no new money at all.'
Although I seldom agree with aides to Mrs. Thatcher, that is a reasonable estimate of what happened over the previous week. We have had the spectacle of a Secretary of State for Scotland implicitly or explicitly threatening resignation to win the right to reshuffle money within his own budget which he has always claimed that he was in sole charge of anyway. Such a pathetic sight calls to mind the comment by one of my predecessors in east Aberdeenshire, Bob Boothby, when he dismissed the office of the Secretary of State for Scotland as "the scullery maid of the Cabinet". There can be no doubt that the present incumbent is well fitted to that description.
The lesson that the people of Scotland will draw from the events of last week is not about the falling political stock of the Secretary of State for Scotland. The real lesson will be simple, and it is that this Government will bend, break and crack under political pressure. Political pressure will be intensified over the next year, and an early opportunity will be presented in the regional elections, when the objective will be to remove every single Conservative councillor from Scottish politics. Moreover, the target of the non-payment campaign, which is growing in Scotland, will be to remove the poll tax altogether.
In opening today's debate, the Secretary of State for Employment gave a hostage to fortune when he said that an unenforceable law does not justify its position on the statute book. The poll tax in Scotland is well on the way to being a voluntary tax. It will he totally unenforceable as the non-payment army grows in 1990 from the present 500,000 members. The target of the campaign is not the amelioration or modification of the poll tax but the total removal of this evil tax from the statute book.
My hon. Friend the Member for Caernarfon (Mr. Wigley) has specifically referred to one tax change in the Budget—the doubling of the blind persons' tax allowance, which is a welcome change, but, as my hon. Friend would point out, it will benefit only a small proportion of visually handicapped people. The tax allowance is payable only to blind people who are registered blind with the Department of Social Security and also have an income that is sufficiently high to be taxed. The Royal National Institute for the Blind estimates that only about one third of blind people will be on incomes that are high enough to make use of that special allowance and that many more blind people will be reliant on social security benefits than make use of the allowance. I hope that the Treasury Bench will take note of that point when disability benefits are next considered.
The Budget and the Chancellor's speech are at best irrelevant to Scottish economic conditions. It will be of no great surprise to the Treasury Bench that the Budget will not enjoy the confidence of Scottish Members of Parliament. What is perhaps more revealing is the vote of

no confidence that was passed on the Government's economic policies by the National Federation of Self Employed and Small Business Ltd. at its annual general meeting at Inverness last week.
The growing dissatisfaction among small business with the Government's policies has been based on the realisation that Scotland is suffering from economic policies that may or may not be appropriate to the overheated economy of the south-east of England and that are most certainly not appropriate to the Scottish economy with substantial underused resources. It is bad enough to have to suffer from penal rates of interest when the economy is overheating, but it adds considerable insult to substantial injury to have that medicine applied when we do not even suffer from such an economic disease.
The fundamental weakness of the Budget is that it has done nothing to tackle social and geographical imbalances within the United Kingdom economy. The Chancellor did nothing to redeem the disgraceful move by his predecessor in cutting higher rate taxes. He has done nothing whatever to ameliorate the socially regressive impact of the poll tax. From a Scottish point of view, the key factor is that the Budget does nothing for Scottish economic requirements. It is only through constitutional change in Scotland and, in particular, the achievement of Scottish independence within the European Community that we can have an economic policy that is designed and suitable for the Scottish economy and, just as important, a social policy which is amenable to the Scottish desire for social equity and economic justice. The lesson that Scotland has learnt from the Budget is that the Prime Minister, the Chancellor and the Government are now on the run, and we intend to keep it that way.

Mr. Deputy Speaker (Sir Paul Dean): Order. In view of hon. Members' excellent co-operation and the fact that some hon. Members who applied to speak have withdrawn, I am now prepared to relax the 10-minute limit on speeches—not to take it off, but to relax it.

Mr. David Davis (Boothferry): Thank you, Mr. Deputy Speaker. I am not quite sure to what extent I shall take advantage of that relaxation, but we shall see.
I am sure that the House will forgive me if I do not follow the new claim for Scottish independence that was put forward by the hon. Member for Banff and Buchan (Mr. Salmond). I am sorry that the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) is not in his place. Like him, I am a fan of the late, great lain Macleod and I should like to correct the right hon. Gentleman's quotation. If my memory serves me right, Iain Macleod said of Budgets,
A Budget that is praised in the spring will be dammed in the autumn"—
not, "A Budget that is praised today will be damned tomorrow."
I suspect that this Budget will exactly reverse that first maxim, which will be an interesting demonstration of another aspect of short termism for the Opposition Front Bench.
In the past few days the City, its pundits and the financial media commentators have criticised the Budget as not being tough enough. That is an extraordinary criticism when one looks back over the last couple of months to see what they themselves have said. Only two or three months ago they were advancing cases that would


have produced exactly this Budget. Indeed, that is the case that was put by their unexpected proxy in the House this evening, the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore). I am sorry that he is no longer in his place to hear my points.
If we are generous, we can say that the commentators' comments must have had something behind them. If we are generous, we could look to see what changed the mood of the City over what constituted a sufficiently tough Budget. One presumes that those in the City took their change of mood from the national public statistics of the past few months. I refer especially to the balance of payments and the balance of trade figures, which showed a deficit of £2 billion in January, and to the retail sales figures, which showed a nominal growth of 2 per cent. last month on the year-on-year basis. If that is what changed their mood and led to their judgment of the Budget, which has been replicated by Opposition Members in the past few days, one is bound to say that, at the very least, that judgment is childish.
One hopes that even the teenage scribblers among them are old enough to look back at the history books and to consider the reliability of the statistics such as those from which they have taken their cue. If they were to look back to a few historic crises that Opposition Members will remember well, they would see that in the 1960s and 1970s, when we had trade and other crises such as that involving the International Monetary Fund, there were even errors in the GDP judgment, which is the most stable and the biggest number and, therefore, one would think, the easiest to get right. Nevertheless, there were errors in that of between 4 and 6 per cent.,—or of between two and four years' growth in those days. Those were the errors on an annual figure, let alone on a quarterly or a monthly figure.
Commentators could also look back to see errors in the trade balance. Invisibles have been a key issue in the developments of the past few months, but there was a £1 billion error in the invisible figure in 1976, which changed the amount from £2 billion to £3 billion positive, when it was adjusted. That was important, given the IMF crisis at the time. Sir Leo Pliatzky, an adviser to the Labour Government in those days, has pointed out that those errors in the national accounts led the major policy misjudgments at the time. He picked out another number —the £2·5 billion overestimate of public expenditure in the late 1970s.
Therefore, the set of figures that seemed to change the mood of the City in the first few days after the Budget seem extraordinarily thin pieces of data on which to base a judgment, especially when the City itself is surrounded by anecdotal data. I refer to the summary in The Sunday Times at the weekend, which said
Retail squeeze tightens its grip",
which is exactly the opposite message to that adduced from the national accounted figures. Every story that was summarised under that headline was at least a week old. The article referred to the various retail consortia that were having trouble because sales, margins and volumes were under pressure. In reaching a conclusion on the Budget on that basis, the City therefore made a poor judgment.
We know that such national accounting figures lead to poor judgments and, to some extent, they lead to the sort of problem that we have seen time and time again in

post-war economic management. I refer to putting a brake on the economy long after it has started to decelerate—indeed, long after it has already achieved some deceleration. In effect, the City is calling for a reinstatement of "stop-go". That is extraordinary and the City would deny it, but in effect that is what it has said about the Budget. It has said, "We want a tougher Budget because we have been frightened by a few numbers in the past few days."
That is not the only error that the City pundits and their proxies on the Opposition Benches have made—[Interruption.] I am glad that the cap fits. I hope that Opposition Members are getting their fees. The City has also made the error of making a judgment of risk and saying that when facing an inflationary problem, the tougher Budget is the less risky one. In effect, the City has said, "If we are looking at a grey area in which to cast the Budget, the toughest, the most fiscally sharp and the tightest money Budget is the safest one." However, that is not the case.
Again, we have evidence that that strategy has failed in the past. The easiest way to understand it is to consider the workings of a virtuous spiral in a healthy economy. Let us consider economies that we should like to emulate, such as those of Japan, Korea and West Germany and this economy before the crash of 1987 knocked it somewhat off line. All those economies have high growth. That high growth makes it easy to get high productivity.
That is statistically well established, everybody knows it and it is also easy to see anecdotally how that comes about. If one is running a factory and one has a 10 per cent. increase in output, it is easy to get a 10 per cent. increase in productivity. All that one has to do is to hold the manpower steady and to solve a few technical problems. If, on the other hand, one has a constant output and one is trying to get a 10 per cent. improvement in productivity, one has to sack people. That is miserable, unpleasant and difficult and as well as technical problems, there are negotiating problems. Therefore, when there is low growth, there is a poor productivity record. Irrespective of the micro-economic changes that the Government have brought about in the past 10 years, that growth is needed to generate high productivity improvements.
In a healthy virtuous spiral, that productivity improvement allows high wage increases to be paid. In a couple of the past five years, we have seen 8 per cent. increases in wages; 7 per cent. improvements in productivity and a net 1 per cent. increase in unit costs. Therefore, our competitiveness was also well defended which, in turn, created a new growth boost for the virtuous spiral. We were on that spiral from 1986 until the beginning of 1988. That is the spiral that any good Chancellor should seek to be on again.
Let us consider what would happen if we were to do what the City and its proxies have demanded. Too hard a check would be put on growth and the productivity improvements would evaporate. Therefore, when we are inevitably faced with the 8 per cent. or more wage claims, which we saw even on the morning of the Budget, and they are granted by a British management which, I am sorry to say, is still not very strong and does not get the "mucho macho" award, to which the hon. Member for Banff and Buchan has referred, the increase in costs works its way straight through to the retail prices index.
Monetarists among my hon. Friends will say, "You can choose whether to take that as an increase in costs or an


increase in unemployment", and they are right about that. However, the reality is that after such a check on growth one is facing a tougher decision. That hard check leads to a combination of an inability to compete—because of higher costs and retail price inflation—and unemployment. Therefore, we have both unemployment and inflation. It is a recognisable scenario, which we used to call stagflation. That would be the outcome of a tougher Budget policy than the one that we are pursuing today.

Mr. Ashdown: The Government have predicted economic growth at 1 per cent., although how on earth they can tell it will be I per cent., which is well within the margin of error and well beyond the Government's errors of prediction, I do not know. With economic growth stagnant, and inflation the highest in Europe, the present conditions could only be described as stagflation.

Mr. Davis: The right hon. Gentleman is old enough to remember real stagflation in the late 1970s, when his party, in conjunction with another party, was a supporter of policies that led to inflation at 28 per cent. and rapid increases in unemployment. That is not what we are seeing today. He is right, but he should study his error margins more carefully because we always underestimate GDP and I suspect that 1 per cent. will turn out to be rather more.
The right hon. Gentleman should appreciate the point that I am making, which is that my right hon. Friend the Chancellor has to find his way through a narrow channel. On the one side, he has the tide race of accelerating inflation, and on the other the rocks of recession and stagflation. The Budget would best be described as a "steady as she goes" Budget. That does not make a very good headline or a battle cry for a by-election, but it makes a first-class recommendation for a Government facing difficult decisions in difficult days but taking the best judged way through to get us on to that virtuous spiral.

Mr. Ron Leighton: Despite the sacrifices of 11 years of Thatcherism, the North sea oil revenues and the receipts from privatisation, none of the problems of the British economy has been solved. We are going straight back into the old stop-go cycle. A number of hon. Members think that they have found a panacea for this problem—joining the exchange rate mechanism of the European monetary system. Because I think that there is no intellectually credible evidence for this, I shall devote my speech to this one point.
In a market economy, nothing is fixed in perpetuity. Prices change every day, as do the terms of trade between countries. The exchange rate is simply the price of a currency in terms of other currencies. Like other prices, it will change over time. It is a misunderstanding to imagine that it can be fixed by fiat, or by passing a resolution. Futile attempts to deal with balance of payments deficits or internal price levels by fixing the exchange rate are like trying to control the weather by fixing the barometer. There has been a movement of 4 per cent. in sterling's trade weighted index since the beginning of the month. Its price against a basket of currencies is 85·5 per cent. of what it was in 1980. It has moved 14·9 per cent. against the deutschmark since March of last year. In March 1985, there were 258 yen to the dollar, and at the moment there are 154.
All that demonstrates that if countries have divergencies of economic efficiency and productivity, and different rates of inflation, then the value of their currencies will vary. That simple fact of economic life should be evident to all. If country A has higher productivity and a lower rate of inflation, and country B has lower productivity and a higher rate of inflation, and if their nominal exchange rates are fixed vis à vis each other, what happens, de facto, is that country A's currency is gradually devalued in real terms and country B's is revalued upwards. Country B's goods then become even less competitive and it develops balance of payments deficits, while country A's goods become even more competitive and it piles up large surpluses. A good example of a country A is West Germany, while Britain looks like country B. While we may try to fix the nominal rate, we cannot fix the real rate, and unless the nominal rate is allowed to reflect the real rate, we suffer massive economic dislocation.
The rate of exchange is a measure of the terms of trade with the rest of the world. Those terms change every day with every change in the world economy, and it makes sense to accommodate those changes through the rate of exchange rather than through piling up large deficits or surpluses or changes in the levels of output and _employment. Currently, Britain has a horrendous balance of payments deficit, running at some £20 billion per annum, mainly with the Common Market and particularly with Germany. This deficit accounts for 20 per cent. of our import bill and 25 per cent. of our exports. It is very silly to suggest, as did the previous Chancellor, the right hon. Member for Blaby (Mr. Lawson), that this does not matter. This deficit has to be reversed if we are to prosper. To imagine it can be done by linking the pound to the deutschmark, which is what joining the ERM means, strains credulity too far.
To fix the sterling rate in these circumstances would push us into recession, cause unemployment to grow, destroy growth, make the payments deficit endemic, and lead to a sterling crisis. To appreciate the damage that a wrong and uncompetitive exhange rate can do we need only recall 1980–82, when a quarter of British manufacturing industry was destroyed. If it is said that joining the ERM does not mean a fixed exchange rate, then there is no point in joining. The last Labour Government, in 1978–79, deliberately refused to join the ERM and set out the arguments in a 1978 White Paper. In 1986 the Labour party said that it would join the ERM only if four important preconditions could be obtained. They were: first, entry at a competitive rate; secondly, greater central bank swap arrangements; thirdly, a collaborative growth strategy to combat unemployment; and, fourthly, a greatly expanded regional and structural policy to offset the German surplus. In the policy review document "Meet the Challenge: Make the Change" we said:
We believe that the European monetary system, as at present constituted, suffers from too great an emphasis on deflationary measures as a means of achieving monetary targets and that it imposes obligations which are not symmetrical. We oppose moves towards a European Monetary Union which would further impede progress in this area.
Substantial changes would therefore be required before the next Labour Government could take sterling into the European Exchange Rate. There must be less reliance on interest rate adjustment and more on co-operation between central banks. There would have to be an EC-wide trade policy which contributes to balance of payments stability for


individual members. There must be a co-ordinated EC-wide growth policy. The pound would have to enter at a rate and on conditions which ensured that British goods became and remained competitive.
Those are Labour's preconditions. They are substantial and far-reaching. The question is: are they possible or available?
First, what would a competitive rate be? It is too high at the moment, and it should be lower. We could negotiate, but the experience of Spain is not too encouraging. It had to enter at the existing market rate for the peseta. The problem here is that, even having found the right rate, it would be a fallacy to think it could be safely fixed. What is the right rate at one moment will probably be wrong 18 months or two years later. Labour wants conditions to see that it remains competitive. What are they? Further changes could be accomplished only amid political controversy with our partners and by unanimous agreement, not by our independent decision. Full economic and monetary union, which is the aim, would rule that out altogether.
Then there is the condition of adequate central bank swap arrangements. Some hon. Members mistakenly think that we should thereby obtain the support of the central bankers to defend sterling and also protect us from speculative flows or runs on the pound. There are already facilities through the G7 and the IMF. What else would there be in the ERM? It is utterly naive to believe that, in future, we could all relax because the Conservative central bankers would rush in with unlimited resources to bail out sterling and wish our problems away. First, any help would be through loans, which we should have to repay. Secondly, no more than the IMF would these banks ladle out billions without laying down conditions—that is, dictate to a British Government what their policies should be.
That was demonstrated in 1983, when France borrowed 4 billion ecu, but on terms that insisted on a deflation, which destroyed the programme on which the Mitterrand Government had gone to the electorate. Mitterrand was given a choice between socialist policies and the EMS. He chose the latter. So the central bank swap facilities are not an easy option for a Labour Government. It would be unwise to imagine the bankers would give us unlimited funds to finance socialist policies.
Then what about symmetrical obligations—the equal obligation of surplus countries as well as deficit countries to take action to eliminate imbalances? This sounds nice, but there is no way in which it could happen in the real world. In practice, the burden of adjustment falls more heavily on the central banks whose currencies are weak. There are greater pressures for a tightening of monetary policy—that is, higher interest rates for a weak currency —than a relaxation for a strong currency. Can anyone see the Bundesbank loosening monetary policy to help an ailing sterling? Further, the weak currency has no bargaining power. It is the supplicant asking to borrow someone else's reserves.
So, in practice, there are no symmetrical obligations in the ERM system but an inbuilt deflationary bias instead. Nor would it, as some people fondly imagine, mean lower interest rates in Britain. Without the option of letting the exchange rate take the strain, high interest rates would have to be used to keep the pound within the ERM band.
What about the other Labour party condition of co-ordinated economic expansion and the elimination of inter-Community deficits and surpluses? Anyone with eyes to see can observe there is nothing remotely like this in sight.
Then there is the condition of effective regional and industrial policies. This would effectively mean recycling the surpluses earned by the successful countries back to the deficit countries. In other words, the Germans would be expected to make a present of billions of pounds, or rather marks, to Britain every year. Is it even worth wasting breath on so unlikely an idea? At the moment, we are donating £2 billion net to the Community budget. There is no suggestion that the Community should have a regional policy to recycle its surplus funds. Of course it is unpleasant to have movements in the rate of the pound, but there is one aspect of that which should be of interest to politicians. When there have been such movements in recent years—the most dramatic of temporary depreciations was in 1985—there has been no political crisis and no political drama. How unlike the regular traumas and sterling crises during the period 1945 to 1972 under the Bretton Woods rules and as it would be in the ERM. Do we really want to go back to that? I should have thought that that was the last thing that particularly a Labour Government would want.
It is sometimes said that accommodating a depreciating currency is inflationary. Of course, it increases the price of imported goods. This simply reflects the change in the terms of trade and has the effect of restraining imports, which is now a prime need. It also has the effect of lowering the price of British exports and thus helping to right the balance of payments. Price rises are, however, not automatic. Experience shows that previous depreciations in 1931, 1949 and 1967 led not to price explosions but to corrections of the current account deficits. Perhaps the reason is that allowing the currency to depreciate to its right level, first, reduces the value of the money stocks in terms of foreign currency, secondly, encourages the outflow of hot money by the lower interest rates that it makes possible, and, thirdly, reduces the cost of both public and private debt. The effect of depreciation of prices has to be measured against alternative policies for correcting imbalances, particularly the current high interest rates, which are pushing up costs and prices. The essential difference is that what I advocate would allow an increase in output and employment, whereas higher interest rates reduce output and employment. It is clear from what I have said that, looked at objectively and dispassionately, joining the ERM, instead of solving our problems, would damage and impede our efforts and rob us of control of our domestic affairs.

Several Hon. Members: rose—

Mr. Deputy Speaker: Order. I understand that the Front Bench replies will begin at 9 pm. There are still four hon. Members—two on each side of the House—who hope to be called to speak. I hope that they will agree to divide the remaining time between them.

Mr. John Butcher: I congratulate the hon. Member for Newham, North-East (Mr. Leighton). If I had closed my eyes and forgotten about his accent, I would have assumed that about 60 per cent. of his


speech came from the erstwhile right hon. Member for South Down, Mr. Enoch Powell. It was truly Powellite in part of its construction. I genuinely congratulate the hon. Gentleman on the part of his speech which dealt with the exchange rate mechanism. Such a speech was long overdue from the Opposition Benches. The hon. Gentleman has stated his position clearly. It would add to our debate in this place if those on the Opposition Front Bench were as clear, given their apparent recent wedding to the idea of the ERM.
The fourth condition which the hon. Member for Newham, North-East laid down took me back to the days when the Labour party had a policy on such matters. He said that there should be appropriate adjustment through regional policy, and we all know what will happen to regional policy within the EEC over the next few years. We are in for a turbulent period.
Regional policy for the next few years will mean soft loans to a major extent for the East German economy. The paymasters of the EEC have, correctly, set their policies. They wish to help their brothers, sisters, cousins—their fellow countrymen—in an economy which has been stuck in a time warp for a long time. For East Germany it is now 1947, such is the state of its infrastructure and housing stock, its lack of an enterprise culture and the general nature of its clapped-out economy. Regional policy in Europe means billions of deutschmarks and billions of ecu being nobly and laudably deployed to help 17 million people in beleaguered East Germany. The fourth condition, on which the hon. Member for Newham, North-East did not place too great emphasis, will be even more difficult to deliver than it was back in 1985–86.
Those who have argued for a European central bank have forgotten that the recent justification for redesigning such a mechanism is to take it out of the hands of those objective people who run the Bundesbank and to place the decision making in the hands of the individual Finance Ministers, who in committee, in their cabals and in their smoke-filled rooms, and for much more politicised reasons, would gear and run monetary policy across the European Community. We might find in those circumstances that pan-European monetary policy would be in for an especially turbulent period.
Like the hon. Member for Newham, North-East, I feel that we have been treated today to a number of panaceas that have not been examined properly in the House. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) has argued yet again, in a coded fashion—that is a device that has been used hitherto by Conservative Members, but now it appears that the Labour party has to speak in code —that there should be increased taxation, as that would be an easier option than high interest rates.
I recall a well reasoned argument in an article in The Sunday Times during 1985–86 entitled "Who is selling the Snake Oil?" It examined the proposition that supply side economics really did work. In answer to questions from Opposition Members, we found that, as the top rate of tax came down, not only did the total tax intake increase, but the proportion contributed by the better-off section of our community also increased. Supply-side economics really does work, and reducing taxation is an effective way of adding to the Chancellor's income and allowing us to spend on programmes that the House generally welcomes, such as social services and the reduction of our national

debt. I do not think that increased taxation is any better an argument today than it was when we successfully tested supply side theories in the early and mid-1980s.
Again, in coded observations, the right hon. Gentleman said that he was in favour of investment allowances. Those of us who, in previous incarnations, witnessed capital spending programmes in the private sector know that in February or March, towards the end of the financial year, the capital investment programmes of most companies suddenly had a huge surge because company secretaries and chief accountants were trying to increase their spend on capital goods at the last minute and so reduce their tax bills.
That might have been a laudable objective for accountancy purposes, but the quality of investment on that basis often left a great deal to be desired in the return on capital compared with our European counterparts, especially Germany, the Netherlands and the low countries. I do not believe that investment allowances would be a better way to proceed. It was not then, and it is not now.
I am a staunch adherent to the "manufacturing matters" tendency. I believe that the west midlands will again become the locomotive engine of this country. It is export-based, it is manufacturing-based and it has leavened its employment with imports of service sector activities from the south-east and other parts. It has a strong economy, it is strong in manufacturing and exports, and the return on capital in that region will exceed that of most other regions. I am delighted to say that the competence of our manufacturers remains high.
The third panacea put forward by the right hon. Member for Ashton-under-Lyne was our old friend credit controls. We have yet to hear from the Opposition just how they would introduce credit controls without the commensurate necessity to introduce exchange controls to insulate us from cross-border movements of capital. The markets are now very sophisticated. Those who lend money either to the corporate sector or to individuals would find it easy to bring in money from outside and reintroduce it into our economy at precisely the time that the Opposition would want to prevent such a tactic from being deployed.
The Chancellor was astute in that matter, because, if his objective is to take money out of circulation, the introduction of TESSA—which asks savers to leave their capital sum in one place for five years—is an effective way to achieve that. The reform has been comprehensively under-estimated by the City, by the chattering classes and by the much-vaunted scribblers who have already been referred to during the debate.
The fourth panacea is our old friend the exchange rate mechanism. Our debate on the ERM became obsolete the moment that the people of East Germany, on 18 March, voted for a Christian Democratic Union-based profile to their political representation. From that moment on, we knew that there would be an especially turbulent period in German and pan-European monetary policies.
No one has yet answered the question, what if the United Kingdom were to join the ERM prematurely—for example, now—at a time when its interest rates are 8 per cent. higher than those in Frankfurt? Once in the ERM, corporate borrowers could go to Frankfurt and borrow money without the need to hedge, thereby sucking in a large amount of cash income that would ricochet around the economy and increase the money supply at precisely


the time that we would not want that to happen. My right hon. Friends the Prime Minister and the Chancellor of the Exchequer said that we would join the ERM when the time was right, and that phrase has a clear and real meaning. If we join the ERM prematurely, we will undermine the fight against inflation for the reasons that I have given.
Germany is hoping to build its new wirtschaftswunder, and to do so on the basis of real money. If it is 1947 in East Germany, the East Germans have a choice—they can either take the Attlee solution, the SPD solution—keep their controls and public utilities in public hands—or the Euchen-Erhard solution of real money. They have gone for the real money. That is why they will have their wirtschaftswunder, but in the meantime all movement in Europe towards integration of our financial systems must remain on hold. That is the best service that we can do for our friends in Germany.
The four panaceas suggested by the Opposition will not work. I congratulate the hon. Member for Newham, North-East on the candour with which he delivered his speech. I sincerely hope that we shall hear equal candour from his hon. Friend the Member for Derby, South (Mrs. Beckett) when she replies to the debate.

Mr. Keith Vaz: This is the first time that I have spoken in the House since 20 February, as I have been away on an official visit to India. What I said on that day—as reported in column 836 of Hansard—was the subject of comment in my absence. The statement that I made on that day was made in good faith, but I sincerely regret any confusion that it may have caused. I am happy to put the record straight on this first opportunity to do so.
Few Chancellors have had the luxury of having their Budget statements tested before the electorate while the Budget is being discussed in the House. I know that other hon. Members have said that the verdict on the Chancellor's Budget was evident in the result of the Mid-Staffordshire by-election when it was announced on Friday morning. If the voters of Mid-Staffordshire had had the opportunity to read the Red Book, they would have noted that paragraph 1.01 makes the cardinal statement of this Government's economic strategy:
The objectives of the Government's economic policy are to defeat inflation and to promote output growth and the creation of jobs.
The utter rejection of the Government's policy was evident in the by-election result.
I listened carefully to the speeches of hon. Members on both sides of the House. I do not think that the people of Mid-Staffordshire, of Leicester or of any other place are concerned with the jargon of TESSA, the exchange rate mechanism or the money supply. They are concerned with their ability to pay their mortgages, to provide a decent life for their children and to have sufficient funds to make ends meet. For millions of people, their expectation of the Budget was an end to what they had suffered during the past 11 years. The Budget provides no strategy to help them out of their misery.
I wish to focus on a number of points during the limited time available. I welcome the changes in tax on workplace nurseries. The Opposition have fought that campaign for many years. Last year I tabled an early-day motion in which I commented on the excellent work being done by

Leicester city council and its workplace nursery, the Val Jones nursery. When I visited the nursery, mothers told me that they wanted the tax abolished, and I am delighted that that has happened. I hope that the Chancellor and the Secretary of State for Education and Science will go a small step further during the next few months and will ensure that the universal principle of free nursery education for the under-fives is put on the statute book. If they do that, the limited changes announced in the Budget will be worthwhile.
I also welcome the additional money to be given to the Football Trust. I sat for many hours on the Standing Committee that considered the Football Spectators Bill. It became an Act, but was shelved by the Government following the Taylor inquiry. I only wish that some of the money for which we asked had been made available during the passage of that Bill.
I am sure that, like me, other hon. Members have constituents attending their surgery who say that they cannot pay their mortgage. I have constituents, specifically from the outer estates of Leicester, who last year purchased a house and cannot keep up with their mortgage payments this year. Mortgage holders in the east midlands are having to pay £127 a month more than they paid a year ago. That is an additional £1,500 a year.
As a monument to the Government's high interest rates policy one has only to look at the Hamilton estate which was supposed to be built in the eastern part of Leicester. Support for the estate comes from both the city and county councils and it was supposed to be the showplace for new houses. A total of 4,000 houses were to be built by the end of the 1980s, but only 150 have been built, half of which are empty because people cannot afford to move into them. Yet 11,000 people are on Leicester's housing waiting list.
There were expectations in Leicester and the east midlands that child benefit would be increased and the Treasury would make additional resources available for that. Over the past three years, families in the east midlands have lost more than £60 million because the Government have refused to increase child benefit.
We hear a great deal about tax cuts. As the House knows, only families that earn more than £275 a week have gained to any extent under the Government's legislation of the past decade. Yet 70 per cent. of families in the east midlands are on incomes below that figure. We have some of the lowest paid in the country and the Budget has done nothing to help them.
We have heard a great deal about the poll tax and even Tory Members justifying their support of it. In the debate that follows and in further debates this week we shall see how many Tory Members rebel against their Government. On Saturday more than 1,000 people gathered in Leicester town hall square to oppose the poll tax. I was presented with a petition which was signed by more than 2,000 people. [Interruption.] The hon. Member for Derby, North (Mr. Knight) has comments to make. I hope that he will take part in the debate and represent his constituents' opposition to the poll tax.
The average family in my constituency will have to pay a poll tax at 52 per cent. above what it previously paid in rates. Leicester city council is not extremist. It is a moderate council with an excellent record on spending, yet because of the Government's policy it has had to impose a poll tax of more than £400. The city councillors tried extremely hard to lower the figure, but they were forced to


impose it because of Government cuts in local authority assistance. If the Government are serious about helping those who have to pay the poll tax, specifically pensioners and others on low income, I hope that they will come forward with additional proposals, which they euphemistically call transitional payments, to help those people.
Two vital industries are embellished on the social history of my city—the textile and footwear industries. The Secretary of State for Employment referred to the textile industry. Earlier this year I conducted a survey based on the job losses in those industries. We worked out that two jobs were lost in the footwear and textile industries every hour. By the time the debate has finished, a further 10 jobs will have been lost. Since Christmas 1,500 jobs have been lost in Leicestershire and since June 1989, 16,000 jobs have been lost nationally. T. W. Kempton made 750 people redundant. Today in Leicester it has been confirmed that Paisley Hyre is to make 750 people redundant and G and K, 50 people. Twin Textile have made 70 people redundant and Whytes have made 20 redundant. They are household names involved in the history and development of Leicester and the east midlands. Now they are names on the tombstones of the textile industry.
The same applies to the footwear industry. In the past two years, 2,000 jobs have been lost in the footwear industry in Leicester. That is more than one third of the work force. Since Christmas one of the greatest names in the footwear industry, Glovese, which used to be a leading manufacturer of ladies boots and shoes, has made 300 people redundant and closed its premises. Portland Shoes, Co-op Footwear and Lawson-Ward are further examples.
Tory Members representing Leicester make statements in the press, especially to the Leicester Mercury, about how hard they are fighting for the footwear and textile industries. Yet in the House they vote for Government policy and support the Government on the multi-fibre arrangement which will devastate these two industries. Who is to blame for the devastation? The Government are to blame. The high level of interest rates, the level of exchange rates and the current volume of imports, especially from the far east and Portugal, are crippling these essential industries. In addition, the unified business rate, which is the poll tax that will be imposed on small businesses, will cause further closures. By the time the Chancellor presents his next Budget the industries will have been cut in half because of Government policies.
Budgets are supposed to create the climate and conditions for economic growth. This Budget does nothing of the sort. It is complacent and will preside over the final destruction of this uncaring Government.

Mrs. Teresa Gorman: I, too, congratulate the hon. Member for Newham, North-East (Mr. Leighton) on his splendid exposition of an alternative Budget and financial strategy. His position was endorsed largely by my hon. Friend the Member for Coventry, South-West (Mr. Butcher). If we had a low pound, we could have low interest rates. Production costs would be lower, so our exports would cost less. We could then have a lower balance of payments, if we decided that that was important. As a result the burden on mortgage payers would be reduced. That cycle has been well explained by other hon. Members.
I greatly welcome the proposals that will assist mothers to care for their children in workplace nurseries while they go out to work. They apply to a relatively small number of women, about 3,000. At the weekend I heard my right: hon. and learned Friend the Secretary of State for Employment say that he thought that that provision would be extended to nurseries other than those at the workplace and that employers could pay for that help somewhere other than on the immediate work premises. I hope that when my right hon. Friend the Chancellor of the Exchequer replies, he will make that clear, because that will be equally welcome by many women.
A couple of weeks ago, I previewed that type of proposal in my ten-minute Bill. I have had the most amazing support for it across the country and across parties. The National Union of Teachers, the National and Local Government Officers Association and the Stockbridge and Deepcar Child-minders Association have written to me. There would be tremendous support if my right hon. Friend the Chancellor of the Exchequer expanded the provision to include a wider range of tax relief for people who need help with domestic responsibilities. I have had a lot of letters from people who have to go out to work and leave elderly relatives at home. They could do with that kind of tax relief on the cost of providing someone to care for those elderly relatives.
An extenstion of that tax relief would tie in with three strands of Government policy: the campaign to get more women back to work; the proposal to extend nursery care, which is popular throughout the country but which could be achieved by making care tax deductible rather than putting more Government money into it; and the recent proposal to help older people remain with the family instead of moving them into a home. If we allow tax relief to children caring for elderly parents, they may be prepared to keep their parents with them. People would like to do that if they could get tax relief on the cost of providing care in the home rather than having to give up their job to stay at home themselves.
The extension of that tax relief would enormously benefit the Treasury because of the savings that it would make on social service provision. It might help to meet the increasing demand for nursery care, and the increasing need for women in the workplace, which we have discussed at some length. It might create a new industry on the caring side of society, which would look after people in their own homes. That would be more cost effective than social services departments giving out large sums of money directly out of the taxes. It would cause an enormous surge in the child care business, whether at nursery level or for care before and after children are at school. Children often need care at those times of day and it would be important and useful.
One teacher wrote to me to say that, although she had gone back to full-time teaching, after she had paid for full-time childcare for her children at home she netted only £200 a month out of her salary. That is hardly an incentive to get people back to work.
The National Union of Teachers tells me that there are 400,000 trained teachers—mostly women—at home who do not go out to work because there is not a great enough incentive to do so and to provide for care in the home. We need that enormous pool of teachers back in the labour force. By extending that provision to include a wider range of beneficiaries, the Government would be doing themselves and all of us a favour.


In addition to the House considering this issue, the other two great fora of public debate, "Any Questions?" and "Question Time", have also placed it high on their agenda in the past few weeks. I heard the Financial Secretary to the Treasury say at the weekend on "Any Questions?" that the Government's role should be neutral in this issue. By allowing such a concession on workplace nurseries, the Government have breached that neutrality. They have accepted the principle that Government should make allowances in certain cases. Therefore, I ask the Government to extend that concession to a wider spectrum of people.
The hon. Member for Derby, South (Mrs. Beckett) was on the same programme. She pointed out that some women do not earn enough money to benefit from the tax allowance. I am sure that she would agree that we could have both provisions. We could not preclude one to provide the other. I am sure that she will support me when I say that women who earn enough to have the allowance should be able to benefit. Everyone who has to provide care at home should be able to benefit from the extension of that principle. I hope that in Committee on the Finance Bill or on Report we may be able to consider an amendment to extend the tax relief to a wider group of people.
In addition to the support of all those groups that I have mentioned, I have the support of my right hon. Friend the Prime Minister. She was a junior Minister in the House in 1968 when she gave an interview to Good Housekeeping in which she said that she considered that her children had benefited from their mother going to work. She said:
My children like me working; they can see and do things they never would otherwise.
She also said that it would make a tremendous difference if part of the expense of employing others to run her home was allowed against tax. The Good Housekeeping article said:
she has fought fervently for this very thing".
With the support of the Prime Minister, parties across the political spectrum, mothers and fathers who work and people who have to care for the elderly, for the principle of extending tax relief, I hope that my right hon. Friend the Chancellor will give serious consideration in Committee to extending that provision.

Mr. Harry Cohen: I supported the hon. Member for Billericay (Mrs. Gorman) in her Bill to improve child care and domestic tax relief. However, I think that we should go further. There should be proper public provision. The Government are guilty of cutting that provision. They have put a squeeze on local authorities. By freezing child benefit, they have in effect cut it by 24 per cent. I go along with what the hon. Lady said, but we need a lot more.
When the Chancellor got up to speak last Tuesday, there was a glimmer of hope. He started his speech by saying that he was going to abolish two taxes. Instead of abolishing two virtually irrelevant taxes to help share dealers, the abolition of one tax would have done—the poll tax. That is a grossly unjust tax and a huge burden on families, which will push many people into bankruptcy and may make them lose their homes.
The poll tax is 33 per cent. higher than the rates this year and it is highly inflationary. It is no wonder that it is hated across the nation, in Tory areas as well as in Labour areas, and that the Government are reaping the whirlwind because of it. The Chancellor should abolish that tax.
The Chancellor said that inflation is common to all nations, but it is a bit more common to the United Kingdom under a Conservative Government than it is to our major industrial competitors. Inflation here is more than twice the rate in West Germany, for example. Now we have the poll tax and record interest rates. Rents are set to rise by 20 per cent. If councils do not put up rents by 20 per cent. the Government will take away housing subsidies. The CBI said that the new business rate will put 1 per cent. on the retail prices index this year. Prescription charges, fares, electricity, gas, water and the exchange rate devaluation have also contributed to inflation.
I had to laugh when the former Chancellor, the right hon. Member for Blaby (Mr. Lawson), said at the Conservative party conference that it was not the party of devaluation. The exchange rate has been devalued, and has been sinking into free fall, and will continue to do so. The Tory party is the party of devaluation. That has had an effect on inflation. We have had all that from a Government who promised to bring down inflation.
The Budget was a non-event in terms of the country's economic problems. I received a written answer last week which shows that debt has increased by 515 per cent. since 1979. Those who are trying to buy their own homes are particularly badly hit. The number of people who are in arrears with their mortgage payments has risen by about 30 per cent. in the past year. I should prefer an increase in mortgage interest relief, particularly if it were targeted to those who are facing repossession, those on low incomes and first-time buyers, particularly in areas where house prices are high. The Government are making ordinary people pay for their mistakes. That problem was not addressed in the Budget. Personal debt is set to rocket.
The trade deficit is £20 billion per annum; manufacturing output has sunk below the 1979 level; unemployment stands at around 2 million. The Chancellor of the Exchequer said that growth would be only about 1 per cent. next year. That will mean higher unemployment. Public services are underfunded. The National Health Service, community care, public transport and the environment are hugely underfunded, despite the fact that this Government have enjoyed North sea oil revenues amounting to £70 billion. No other Government have enjoyed such huge revenues.
Privatisation proceeds stand at over £30 billion. Harold Macmillan described it as selling off the family silver. As a result of the consumer boom, the Treasury's tax revenues have soared. However, they have all been wasted. Only the rich have benefited. The money has been invested abroad instead of in the United Kingdom. Defence spending has also increased. I also had to laugh when the Chancellor referred to a public sector overshoot of £2·5 billion and then blamed local government. The Ministry of Defence, however, is reported to have overspent by £2 billion on nine projects.
The Chancellor dressed up his tough old mutton Budget as lamb by describing it as a Budget for savers. He did not have to do anything for the big savers; high interest rates are doing that. However, small savers and those without savings are being punished by increased bills. To say that this is a Budget for savers is just a Government


cover-up. The Government have not invested properly, so the Chancellor could introduce only a boxed-in Budget. He cannot give anything away to people; if he did, they would spend it, which would result in more imports.
The country is vulnerable. Germany and Japan are able to force the Government's hand by means of higher and higher interest rates and by one run after another on the pound. The crisis has been caused due to a shortage of United Kingdom-produced goods. Only a Labour Government can rectify that problem. High interest rates will not solve it. There have to be other measures, which must be targeted on the rich. They have benefited from previous Tory Budgets. They ought to pay. The poor, who do not create excess demand, should be protected.
The Government are engaged in a short-term fiddle for their own political interest. They want to create the image of a rosy economy just before the next general election. Interest rates will come down then, albeit temporarily. The Government have paid off borrowing in previous years, as in this year, so that they will be able to borrow again and bribe people next year. They are not interested in the nation's economic prosperity; they are interested only in conning the people before the next election. However, it will not work.
The Government have gone too far by plunging into debt. They have not run the economy sensibly for the future. Their bluff is being called, as we saw in the Mid-Staffordshire by-election. People will not forget. They want and deserve better economic policies. Only Labour can produce them.

Mrs. Margaret Beckett: Many excellent speeches have been made in this debate, as in the three preceding debates on the Budget, on both sides of the House—not that I agreed with everything that was said.
The Budget was presented in a different and quieter style—more in the style of the present Lord President of the Council than that of the right hon. Member for Blaby (Mr. Lawson)—although we had a refresher course today when the right hon. Member for Blaby made it plain that, whatever he has lost, he has retained his arrogance intact.
Moreover, the present Chancellor managed to give the impression of being relaxed, almost of enjoying himself. That goes to show that he is a much better actor than he is given credit for. No Chancellor of the Exchequer in his right mind, or out of it, could enjoy presenting a Budget and forecast in which he tried to explain away the worst trade deficit in our history, rising inflation and peak interest rates, especially when the Government have been in power for 11 years.
I had come reluctantly to the conclusion that I would never hear Ministers stop answering embarrassing questions about their own record by talking about what the Labour Government did 12 or 13 years ago. However, I was wrong. I freely admit my error, and apologise to the Conservative Members whose ingenuity I underestimated so profoundly. They have found a new way of not talking about their own record: they have moved triumphantly and seamlessly from talking about the record of the last Labour Government to inventing a record for the next.
Let me turn to the overall balance and judgment that the Budget represents. Is it, as some commentators have suggested, short-term panic, because we are nearer to

recession than the Government admit? Or is it long-term boldness—a gamble on everything turning out all right after all?
There is of course a third option, which is appearing more and more in the views of commentators: that the Budget does not address the long-term prospects of the economy, but—as we feared and warned—addresses the shot-term prospects of the Conservative party. It is the Budget that Conservative Members needed to restore their morale, instead of the Budget that the country needed to restore the economy.
The gamble—if that is what it is—depends for its success on the electorate's failing to recognise its nature. That is why the Chancellor is so annoyed with my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), who has suggested that he may be aiming for a boomlet in 1991–92. Not that that is not true; predictions of the speed and scale of the resumption of growth shown in the Red Book imply a pre-election boom. What really upsets the Chancellor is the fact that, if the electorate realise what he is up to, he may have risked our future for little short-term gain.
To be charitable, there may be another, slightly different, reason for the Chancellor's annoyance. Perhaps since those predictions were made he has realised—as the economy deteriorates before our very eyes—that perhaps he cannot engineer a pre-election boom; so, making a virtue out of necessity, he claims credit for what he may not be able to escape.
This is, of course, an intensely political Chancellor. We are told by some—perhaps even, implicitly, by the right hon. Member for Blaby today—that the Chancellor is not as brilliant as his predecessor, but has a lot more sense. He is not going to come to the Dispatch Box and tell us that we are just too stupid to understand his brilliance; he picks his words as carefully as he picks his excuses. That was already apparent when he addressed the Treasury Select Committee. He carefully won its sympathy, first by being polite—which it was not used to—and secondly by selecting the range of lesser economic crimes to which he would plead guilty, making a frank and open statement of error but confessing only to minor crimes, and only when he could shuffle off the blame.
Some commentators have expressed surprise at the nature and scale of the Chancellor's gamble. I am not sure why. He may have been, if not the silent partner, at least the quieter one, but he was the partner in the great gamble of 1988, for which we are paying such a heavy price today. That 2p off income tax, and the letting rip of the economy that went with it, is now matched by today's heavy increase in interest rates. The present Chancellor was a partner when, together, he and his predecessor gambled and lost. Now he is going for double or quits.
Those with gambling fever, often quiet souls, may applaud the right hon. Gentleman's daring; more prudent souls—and Labour Members are very prudent because of the stock from which they spring; by definition, there is no one to pick up the pieces if it all goes wrong—will worry about the extent to which the Chancellor is risking our future. Nor is the gamble the only real resemblance between this Chancellor and his predecessor. There is never enough money to do everything that we might wish, but it is when the room for manoeuvre is least that we see most clearly the nature of the choices made—and the nature of those choices differs not one whit from the nature of the choices made by his predecessor.


For all the kind words for small businesses, the cost of the Chancellor's measures for them pales into insignificance beside the cost of his gesture to the City. He told us that the abolition of stamp duty on stocks and shares will cost £120 million in 1990–91. He did not mention that it will cost £800 million in a full year. The Chancellor has introduced tax relief for charitable giving up to £5 million. That is very nice, but how much is intended to give extra encouragement to private donations to city technology colleges which help a tiny minority of the nation's children at the expense of the rest? The concessions on workplace nurseries, the composite rate of tax and poll tax rebates are all welcome, but the Chancellor is only alleviating the burdens imposed by the Government.
The concession on the poll tax will help fewer than 1 per cent. of poll tax payers, and in any case the figures were wrong. The clawback of such help as is given will be severe, assuming that people are earning 20 per cent. on their capital, and the shambles over Scotland exposed once again the incompetence and the injustice of Government policy.
Let me give the House an example of someone who assumes that he will get help from the Chancellor's concessions on the poll tax. Someone with savings of £13,000 would have been debarred by the capital limit under the old system. The assumption of the income from that capital means that a person facing a poll tax of £400 who is eligible for the maximum rebate of 80 per cent. and had to pay £6·15 a week would find that it was offset by the potential income of £6, so there would be no rebate whatsoever.
People will have to apply for the concession on the poll tax. As always, under the means-tested schemes introduced by the Government, help is what they call targeted only on those in the greatest need. Speaking of prudence, I contrast that with the help given in last year's Budget to people such as the Prime Minister to subsidise their private health insurance. That was not targeted on people in any need and will be given automatically and people will not have to apply for it. Perhaps the Chancellor will tell us about the prudence of that.
I now turn to the Budget analysis of the state of the economy. In the Chancellor's speech and on the succeeding four days we have heard about the Government's brilliant record in economic management —the record that led us to the biggest balance of payments deficit and the highest mortgage rates in our history, inflation higher than that of our major competitors, and falling investment.
One of the claims repeatedly made in defence of what we are told is a temporary setback is that, under the present Government, we have seen the longest period of expansion in 50 years. Sometimes we are told that it has been the longest period of expansion in our history. That sounds good, but unfortunately it is not true. Before the OPEC price increase in 1973, all the usual measures of growth in gross domestic product show steady growth under all Governments, including the last Labour Government—from at least 1958 to 1973, or, if one chooses the measure of disposable income, from 1948 to 1973. There were stop-go cycles then, but what are we experiencing now? Without the cushion of North sea oil,

we would probably have seen an earlier example of stop-go under the present Government, as balance of payments constraints would have occurred far earlier.
We are told about the remarkable growth in output after 1982, greater than that in Germany, France and Italy. However, if one examines the entire period from 1979 to 1989—the period during which the Government have had responsibility—the growth in output was average. We were out-performed by Italy, and relatively our position in the OECD, Europe and the G7 countries declined. We are told that exports stabilised as a percentage of world trade after falling for decades. Yet the volume of exports grew less than the volume of world trade in all but the two years 1982 and 1987, and the volume of imports grew massively more in every year except 1980 and 1985 and was roughly the same in 1989.
We are told that total investment has grown since 1980 because of the growth of business confidence, and that total United Kingdom investment has grown faster than that of any other European country. In fact, from 1980 to 1986, gross domestic fixed capital formation as a percentage of gross domestic product was lower than in 1979. In 1981, it fell to the lowest level since 1959. Even in the boom year of 1989, it did not reach the post-war record achieved in the period 1968–70 under a Labour Government.
In any case, manufacturing investment—the engine of recovery—was lower in every year between 1980 and 1987 than it had been in 1979, and from 1981 until 1983 it was at levels not seen since the mid-1950s. As for the claim that it grew faster than in any other European country, one can only say that it evidently needed to recover. In fact, in the period 1979–89 the growth of investment in this country was exceeded by Spain, Portugal, Finland, Turkey and Norway—and that is only in Europe. Moreover, all this growth in investment still leaves us near the bottom of the league—18th out of 23 OECD countries—in levels of investment as a percentage of GDP. And we had the benefits of North sea oil.
The Government claim also that, since 1983, they have created more jobs than any other European country—sometimes they say, more than all the others combined. Again, that is just not true. According to the most recent reliable figures, we made up a quarter of the total number of jobs created in the EEC Twelve—not more than all the rest put together. Percentage gains in employment were greater in Italy, the Netherlands, Denmark, Luxembourg, Greece and Portugal.
We staged the strongest recovery after 1983, but between 1979 and 1983 we lost more jobs—1·8 million out of a total EEC job loss of 2·8 million. In addition, all the figures for jobs created in this country include Government schemes. If the numbers of people employed on Government schemes are stripped away, one finds that the number of jobs created in the 1980s was much the same as the number created in the 1970s, when we had no oil —indeed, we had a huge hike in the price of oil—and when we had less favourable terms of trade. Yet we claimed no miracle.

Mr. Richard Page: How does the hon. Lady contrast her figures with the 5·6 per cent. average in the United Kingdom and the 8·8 per cent. average in the EC? Is it not a fact that, in terms of employment, we in this country are better off?

Mrs. Beckett: I do not know whether the hon. Gentleman was listening, and I do not know what figures he is quoting. I have just said that the Tory Government claim to have created more jobs in the 1980s than ever before, and that is simply not true.
Even if all these claims could be made without qualification—and they cannot—to boast of their achievements, as this Government continuously do, without mentioning oil is like someone claiming credit for having prospered more than his neighbour without mentioning that he had won the pools.
But the Government do not make misleading claims just about their overall record. They claim, most misleadingly of all, that the underlying problems of our economy—our lack of competitiveness and our low rate of growth in traded goods and services, what we sell abroad to make our living—has been resolved. Again, the figures give the lie to that claim. Manufacturing output fell by 19 per cent. between 1979 and 1981 and since then it has grown roughly in proportion to total GDP. So, while GDP grew by 24 per cent. in that period, overall manufacturing output grew by only 13 per cent., and is again flat. No wonder we remain 17th out of 20 OECD countries for the rate of growth in output over the period.
The significance of that low place lies also in the fact that, with growing internationalisation and interpenetration of markets, we need to hold on to our market share at home, as well as sell abroad, if we are to succeed. We all know that this is one of our major problems. The export volume may have risen by almost 50 per cent. between 1979 and 1989, but the import volume rose by 110 per cent. While our output growth has been 13 per cent., our expenditure on manufactures has risen by 30 per cent. Hence, again, we have the deterioration in our trade balance in manufactures, from a £2·7 billion surplus in 1979 to a deficit of nearly £17 billion in 1989—the first deficit in manufactured trade in our history, and it appeared under this Government.
The Government used to argue that this was all totally unimportant, as the income from invisibles—from traded services—would keep us going. The forecast now is for a surplus of £1·5 billion on invisibles, compared to £2·5 billion in 1989 and £6 billion in 1988. This suggests that perhaps last month's deficit was not quite the aberration that we were told it was.
The export volume of all services rose by under 15 per cent., and of those financial services contributed by far the greatest growth. We have seen a collapse in earnings from merchant marine and tourism, from which, as usual, the Government have stood aloof, and we are all now reaping the consequences. While the export growth of traded services rose by 15 per cent. between 1979 and 1989, the import growth of traded services rose by over 50 per cent. Although our service trade balance has not yet disappeared, it has fallen as a percentage of gross domestic product.
Tragically, it appears that the Government are not ready even to recognise that problems exist, let alone that they have any duty to help to remedy them. We called in our pre-Budget background briefing, as my hon. Friends have done in the debates, for support for investment, training, research and development and the inputs that have made, and are making, the performance of our competitors superior to ours—the inputs without which we approach 1992 with not one but both hands tied behind our backs.
What did the Chancellor say about training or research and development? In effect, that everything was wonderful. In an unbelievably complacent speech, the Secretary of State for Employment said the same. My hon. Friend the Member for Sedgefield (Mr. Blair) demolished that argument this afternoon.
The Chancellor said that spending on business research and development had risen by 50 per cent. in the past five years. That is good, because between 1981 and 1985, the last period for which good international comparisons are available, we had the lowest rate of growth in total research and development expenditure in real terms of all the OECD countries, except Yugoslavia. We were the only OECD country, except Turkey, to experience a fall in total research and development as a percentage of gross domestic product.
Within those figures, the rate of growth of business-financed research and development was the worst of all OECD countries, except Australia and New Zealand. We were one of only three countries—the others being New Zealand and Eire—in which Government-financed research and development declined in real terms. Since then, Government support has been cut further, while our most successful competitors continue to spend a higher proportion of wealth on research and development than us.
The danger in which that places us is highlighted by two recent press reports. The first appeared yesterday in the Mail on Sunday and is only the latest in a series of articles on the brain drain from this country of qualified scientists and technologists. Until recently, the Government refused to acknowledge that the brain drain existed, and have taken no steps to resolve it.
The second article appeared in The Guardian on a report from the 1FO Institute in Munich, that some 40 per cent. of all manufacturing products that will be internationally traded in 1995 are not yet in production.
The pace of innovation in products is quickening, and if we are to remain competitive, there must be more investment and research. Manufacturing investment is falling, and the Government's Budget predictions show that they expect it to fall, yet they continue to stand aside.
The international comparisons made for the Japanese company Yamaichi are bad enough for this year. They show us at the bottom of the growth league, at the top of the inflation league and with the highest trade deficit in Europe. More worrying, they show no change in the position in their forecasts for 1990 or 1991.

Mr. David Lightbown (Lords Commissioner to the Treasury): This is depressing.

Mrs. Beckett: I agree—it is depressing.
There is no vision in the Budget, nothing to prepare us for the 1990s and no fiscal incentives, however minor, for good environmental policies, apart from the differential on lead-free petrol. There is nothing for those struggling to pay the extra charges that the Government have imposed on them. The excess price increases in electricity, water, fares and rents have all been imposed as a consequence of Government policy.
There is nothing for the small business or mortgage payer to alleviate, by even the smallest degree, the burden of interest rates, and nothing to create the conditions in which they might be lowered. All we get is a series of little exhortations—"no gain without pain", as the Chief


Secretary said. That makes one wonder what Treasury Ministers are reading these days. I have a theory: the Prime Minister has embroidered a couple of samplers with those mottoes, and the Chancellor and the Chief Secretary have been forced to hang them over their desks and read them each morning.
As I contemplate the Government's continued reliance on their one-club interest rate policy, the proverbial blunt instrument approach, I am strongly reminded of the descriptions I remember from school history lessons of the mediaeval practice of medicine—what I believe later and wiser generations called "heroic medicine". It seems that what we are experiencing at the hands of the Government is heroic economics.
I see the Chancellor as a sort of economic equivalent of the mediaeval barber surgeon, someone who knows only a limited range of drastic remedies to cleanse the system—all that purging and cupping, cures that were frequently applied with such ferocity that they killed more people than would have succumbed to the disease. Who can doubt that the mediaeval barber surgeon would have said to the patients and their anxious families, as he drained that last fatal pint which weakened the patient beyond the point of recovery, "If it isn't hurting, it isn't working."
Almost every Opposition speaker, from whichever party, and even some courageous souls on the Conservative Benches, have identified the Budget as yet another missed opportunity for the nation, perhaps even a missed opportunity for the Conservative party. The truth is that we are all paying for the sins of 1987, 1988 and 1989, and those who benefited least are paying most.
There is a clear attempt to put much of the blame on the right hon. Member for Blaby, but most of the Government's policies have, with a few honourable exceptions, been not just supported, but supported wholeheartedly—as many hon. Members made clear in the Budget debates—by all Conservative Members, including all the potential contenders for leadership. I see that no one seems to want to take a bow. Collectively, they have frittered away the greatest windfall that this country has ever seen, not just in our lifetime, but for many generations. They have frittered away £83 billion, at today's prices, of income from the North sea. They have frittered away our opportunities, our children's opportunities and our grandchildren's opportunities, as well as their own.
In the words of the most destructive, damaging and unjust piece of legislation that even this Government have passed, we intend to hold them, one and all, "jointly and severally liable".

The Chancellor of the Exchequer (Mr. John Major): The hon. Member for Derby, South (Mr. Beckett) ended the Opposition's contribution to this debate in much the same manner as her right hon. and learned Friend the Member for Monklands, East (Mr. Smith) opened it on Wednesday. Her speech was amusing, occasionally opaque, statistically selective, strong on criticism, but almost totally devoid of any detailed alternatives.
In the hon. Lady's statistical selections there were, alas, some facts that she missed. She missed the fact that between 1980 and 1989 this country grew faster than any

major European country except Spain. She missed the fact that, even with slower growth forecast for 1990, the United Kingdom will have recorded higher growth in the past 10 years than either France or Germany. She missed the fact that, since 1980, the United Kingdom's manufacturing output has grown faster than that of either France or Germany, in stark contrast with the 1960s and 1970s when the United Kingdom was bottom of the growth league. Those are just a small selection of the facts that the hon. Lady missed.
Opposition Members have now been in opposition for a decade or more. After such a lengthy period, it is a little puzzling that they have so little constructive to say about the future. Either they do not have policies or they will not say what those policies are. I know that the right hon. and learned Member for Monklands, East is an intelligent and perceptive politician and, therefore, after 11 years of being an intelligent and perceptive politician he must have policies. If he does not have policies after 11 years, he is too incompetent to be in government. If he does have policies and he will not say what they are, he is too shady to be in government. The Opposition are now secretive to the point of deception.
There is a new tendency in the Labour party. The "don't say, won't say" tendency is now running the Labour party from the Opposition Front Bench. That tendency is led by the right hon. and learned Member for Monklands, East —a distinguished Queen's counsel—and under his guidance the Labour party has opted for the right to silence, for fear that it will incriminate itself by telling people its policies.
Labour Members are not silent only in the House. These days they are also silent in the media. When did we last see a significant interview with the right hon. and learned Member for Monklands, East, with the right hon. Member for Islwyn (Mr. Kinnock) the Leader of the Opposition, the hon. Member for Dunfermline, East (Mr. Brown) or any of the Opposition Front Bench in which they have exposed themselves to discussion of their policies? Not having seen such an interview for some time, can we ever expect to see one again?
Over the past few days, we have had a wide-ranging debate. There have been a number of compelling speeches to which I wish to refer. Today there were a number of outstanding speeches to which a reply is merited. My right hon. Friend the Member for Blaby (Mr. Lawson) made two specific points in a compelling speech. First, he said that a tax increase at present would be unwise and I will refer to that later, as the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) and others also referred to that issue. Secondly, my right hon. Friend the Member for Blaby called for early entry into the exchange rate mechanism of the European monetary system, and that call was echoed by my hon. Friend the Member for Horsham (Sir P. Hordern) and others.
I reaffirm to my right hon. Friend the Member for Blaby and to my colleagues that progress is being made towards entry and that we will enter the exchange rate mechanism when the conditions that we have set out are met fully. As my right hon. Friend the Member for Blaby will be aware, we wish to see inflation fall before we enter the mechanism. That concern is not shared simply by us; it is shared also by the governor of the Bundesbank. When sterling enters the exchange rate mechanism, it may well be turbulent not only for us, but for our European partners.


There should be no doubt that join we will, when the conditions that my right hon. Friend the Prime Minister set out have been met.
My right hon. Friend the Member for Blaby also referred to the Opposition's policy—or lack of it—on the exchange rate mechanism. Of course the Opposition say, "We will join the exchange rate mechanism", although the hon. Member for Newham, North-East (Mr. Leighton), in a speech that I was sorry to miss, apparently has a different view about that. The Opposition's promise is so hedged by codicils as to be almost meaningless. They are not so much proposing to join the exchange rate mechanism as to abolish it. Their conditions for entry would drive a coach and horses through the existing system.
Last year the right hon. and learned Member for Monklands, East told the House that the conditions that the Labour party attaches to joining the mechanism, apart from the difficult condition of joining at the effective rate—which he did not identify—are that there should be adequate swap arrangements between the central banks, a well-organised regional policy within the Community and that the thrust of economic policies within the Community should be for growth not for deflation.
As Brian Walden pointed out to the hon. Member for Dagenham (Mr. Gould)—

Mr. Paul Boateng: Brian Walden is the Government's friend.

Mr. Major: Mr. Walden was a distinguished member of the Opposition Benches.
Mr. Walden said that Labour's terms for entry are much tougher than the Government's. For instance, he said that Labour wants a huge regional policy. It wants a guarantee that weaker currencies will be defended much more effectively than at the moment. Labour wants the whole purpose of the exchange rate mechanism to be changed.
The truth is that Labour's commitment to the mechanism is a sham. It is an attempt to take a soft option, but the exchange rate mechanism is not a soft option. As my hon. Friend the Member for Horsham made clear, it is a discipline, not a soft option. Financial discipline is something that the Labour party never has understood and never will understand. We understand it, and, in due course, we will join the exchange rate mechanism.

Mr. A. J. Beith: Will the Chancellor say here and now whether we will join as long as the right hon. Lady is Prime Minister?

Mr. Major: For the hon. Gentleman, that question is uncharacteristically cheap. My right hon. Friend the Prime Minister made the decision that we would join and, in Madrid, set out the terms under which we would join.
My hon. Friend the Member for Croydon, South (Sir W. Clark) also made a powerful speech in which he particularly welcomed the introduction of the tax-exempt special savings account. I was sorry to learn recently that my hon. Friend will retire at the end of this Parliament. Conservative Members will miss him and his contributions to our debates. As he said, the new tax-exempt savings scheme represents a considerable incentive for saving. We have already seen the success of personal equity plans, the brainchild of my right hon. Friend the Member for Blaby, in encouraging saving in shares. TESSA offers similar incentives. It is tailored for savings with building societies

and banks which, for many people remain, and will remain in future, the most convenient and popular vehicle. I hope that the tax privileges of TESSA will get many people started on the saving habit and enable many more people to feel that it is worth building up savings for the future. I am glad to see that banks and building societies have responded positively to this innovation. For example, the Royal Bank of Scotland said:
This is what the banks and building societies have wanted for years. It will do a great deal to encourage the small saver and we will be aiming to introduce the TESSA account as soon as possible.
I hope that many others will follow that lead and that many people will take up the new savings incentive to build security and independence for themselves and their families.
During the span of the debate, a number of Opposition Members have chosen to quote relatively disobliging remarks from brokers' circulars and from other sources. Tempting though it is, I will not respond by quoting what some of those very same people recommended just a few days before the Budget, but it is striking how warm a welcome the Budget has received from business and industry.

Mr. Jack Straw: What about the electors of Mid-Staffordshire?

Mr. Major: The trouble with the hon. Member for Blackburn (Mr. Straw) is that he fears that the strategy will work, and he is right—it will.
The particular help that the Budget offers for smaller businesses has been acknowledged not only by Opposition Members but by the Association of British Chambers of Commerce, which welcomed
the combination of a powerful boost to savings with control of inflation.
It added:
the business community should be well pleased with it.
The Confederation of British Industry, the Institute of Directors and others have offered their full support for the determination to bring down inflation.
There was support, too, from many business leaders such as Sir Denys Henderson of ICI, Mark Boleat of the Building Societies Association, and many others, including Peter Morgan of the 10D. Most of those people know that, in present circumstances, we cannot offer this as a giveaway Budget, nor do I think at present that business would thank us for one.
Businesses know that the one overriding risk to our economy and to everyone in it would be to give up the battle against inflation. They remember only too well that rapidly rising prices in the past have destroyed planning, investment and motivation, and, above all, industrial relations, because inflation is the mother and father of industrial conflict. They know, too, that that was in the 1970s—not the 1980s—When the Labour Government were in power.
Business men know that with increasingly open markets and tough competition in the future, Britain simply cannot afford that sort of self-inflicted wound. That is why business understands and approves both a tight fiscal stance and a tight monetary stance. I offer my right hon. and hon. Friends the promise that that is precisely what we will keep—in the short term, in the medium term and in the long term, because we are determined to bring inflation down and to keep it down.


British business does not contain many adherents of the sado-masochistic school of economic policy—those who think that the first Budget to put up taxes since 1981 did not put them up enough. It is not surprising that that doctrine has more supporters among those whose business is writing than among those whose business is business. Not many people in British industry would derive much comfort from a gratuitous helping of fiscal austerity.
City fashions come and they go. At the moment, the fashionable view may be that the fiscal brakes should be jammed in an emergency stop. However, that ignores all the evidence of recent years about the way in which fiscal policy works, as my right hon. Friend the Member for Blaby made clear. If one looks at our economic history, it is clear that when Governments have attempted to fine-tune fiscal policy to beat the cycle, more often than not that has turned out to be precisely the wrong thing to do at precisely the wrong time. Contrast that with the highly beneficial effects of stable or falling tax rates on the supply side of the British economy. It does not make any sense to set them at risk by a panicky fiscal reaction which, in retrospect, might turn out to be overdone.
I make no apology whatsoever for the fiscal judgment that I made when I framed the Budget. The right hon. Member for Ashton-under-Lyne spoke in his usual thoughtful and gracious way. In doing so, he questioned both the Budget judgment and the fiscal judgment and referred to market difficulties, as did the hon. Member for Durham, North (Mr. Radice). In so doing, they did not mention—although I reminded the right hon. Gentleman of this—that even as they spoke sterling was higher than when I delivered the Budget speech last Tuesday. When I pointed that out to the right hon. Gentleman in an intervention, he said that we must await the longer term. Of course that is right—and perhaps the Budget's critics would be wise to wait for the longer term as well before making their criticisms.
In all our debates, the one substantive criticism has been that fiscal policy was not tight enough. The right hon. Member for Llanelli (Mr. Davies) made that same point. I agree neither with the right hon. Gentleman nor with the critics. Sometimes the right thing to do is to stand still with a neutral fiscal Budget. That is what I chose to do on this occasion. If I had judged that it was necessary to raise taxes, I should have raised taxes, but I did not reach that judgment. My right hon. Friend the Member for Worthing (Mr. Higgins) shares that view. He accurately pointed out the difficulties of making such a judgment at present, not least difficulties with the statistical base, which I am considering how to improve.
Let us consider the fiscal position and record. In recent years, the country has been repaying its debts year after year. No. G7 country, except Japan, either is doing that or has been doing it in recent years. Moreover, the sheer scale of our repayments has already made a sizeable inroad into our public sector debt.
As for the future, under the fiscal judgments that have been reached, fiscal policy will knock out a further £17 billion of debt over this year and the next two years. As a result of that, we shall have reduced national debt, which stood at the beginning of this year at around £160 billion, by massive sums in total. That is the reality of the fiscal judgment. Our fiscal strength also means that debt as a

proportion of GDP will continue what has been a headlong fall—from 50 per cent. in 1979, to 32 per cent. in 1989 to a forecast of 28 per cent. in 1990. It is now down to levels not seen since the beginning of the first world war. It is hard and intellectually indefensible to suggest that the fiscal position is neither satisfactory nor tight.
It is tight for other reasons, too, for we plan to repay £7 billion this year—and £7 billion next year. Even though this year has had the benefit of cyclically stronger growth than next year, the debt repayment next year will remain the same. The reason why it turned out at £7 billion and not £14 billion this year was not because fiscal policy was artificially relaxed. There has been no change in tax rates or structure. It was the one-off effect of the corporation tax shortfall as a result of the build-up of allowances for high investment, of the results of the national insurance rebates, as so many people took out personal pensions, costing the PSBR £2·5 billion, of the result of slightly lower privatisation proceeds than we had imagined and of the result of truly massive overspending of local government as councils sought to avoid new capital controls. To call that a loosening of policy is a perversion of logic. It may fill the columns of newspapers, but it ought not to fill minds as being the reality of what has happened. [HON. MEMBERS: "Oh."] If Opposition Members listen, they may learn something.

Mr. Boateng: We need no lectures from you.

Mr. Major: It is, I grant, unlikely that they will listen, but we shall try.
My right hon. Friend the Member for Worthing pointed out what advocates of higher taxation would say if such taxation generated either lower growth or higher wage demands. He was, as ever, both perceptive and right. My right hon. Friend also welcomed a number of other measures in the Budget and especially the abolition of composite rate tax, as did my hon. Friend the Member for Isle of Wight (Mr. Field). As my right hon. and hon. Friends know, composite rate tax was introduced because it brought substantial administrative savings. The Inland Revenue did not have to check the interest on millions of accounts to collect what were often small amounts of tax. Instead, tax was automatically deducted at source. I have no doubt that we are right to abolish the composite rate. I can think of no other example where tax is collected from people who have no liability to pay it and where, in no circumstances, can it be reclaimed once it has been deducted. Once independent taxation comes into force, as many as 14 million people would have paid tax that they did not owe on their interest.
However, let me say a word about the scale of the task of abolition. There are some 34 million interest-bearing bank and building society accounts and, during the year, many of the people holding them will change from being taxpayers to being non-taxpayers. Therefore, we shall need to negotiate with the banks and building societies with the aim of introducing a simple scheme of self-certification to allow non-taxpaying savers to receive their interest gross. Those who cannot self-certificate for any reason will be able to reclaim tax. Such arrangements are not easy to introduce and it will be a great challenge to have them in place by next April. Many felt that it would take at least two years to put them in place. It is for this reason, and for


this reason only, that composite rate tax cannot be abolished immediately. If it had been possible to do so, I would have done so.
A number of the measures that I introduced in the Budget last week have been widely welcomed throughout the House and outside. I am especially pleased by the widespread welcome that has been given to the proposal for a reduction in pool betting duty to contribute to the cost of safety improvements at football grounds. As we have been in the business of quotes today, particularly from Opposition Members, I shall quote the chief executive of the Football Association, who called it
the start of a new era for football".
I hope that that is true, especially in terms of the conditions in which fans have to watch the game.
It is surely a measure of success that the Opposition appear to be queuing to take credit for having thought of the scheme. I have no objection to that and no party points to make about it. At Wembley yesterday, with the hon. Member for Newham, North-West (Mr. Banks), who may not care to admit to the company that he was in, and with the hon. Member for Middlesbrough (Mr. Bell), it was clear that the change is widely appreciated by both fans and administrators. The House may wish to know that the Football Trust and the pools companies will be meeting tomorrow to discuss the arrangements. I hope that they can agree on the details speedily so that we can reduce the duty without delay.
There has been a considerable welcome from charities for the new gift aid scheme. A number of charities have said that they receive a substantial number of one-off gifts of £600 and over. In future these gifts will carry the bonus of tax relief for the charity. This alone will increase their income, but I have no doubt that if the scheme is promoted actively many more people will be encouraged to give generously to a range of good causes. As the director of the Charities Aid Foundation commented:
This package of measures is the best ever by any Government.
He added that the package should be worth £50 million a year if charities pull themselves together and market it properly. I hope that he is right. The CAF was joined in its welcome by the Imperial Cancer Research Fund, the National Council for Voluntary Organisations, the Charities Value Added Tax Reform Group, the National Arts Collection Fund and the Royal National Lifeboat Institution. We now have a proper structure for charities and for giving. There are covenants for the regular giver over years, a payroll giving scheme to be deducted and paid weekly or monthly, and gift aid to provide, for the first time, for one-off gifts of cash. It is the best system of charitable giving, I suspect, of any nation in the European Community.
The measure to exempt the benefit of workplace nurseries from income tax has been widely welcomed. I have been informed today that a number of employers are responding already by announcing plans to open workplace nurseries for their employees. For example, it is reported that BP will be setting up workplace nurseries for its 30,000 staff following the Budget. There are a number of other employers who will be doing likewise, notably the Midland bank, which is proposing to set up 200 workplace nurseries. That is an extremely sensible response to the labour market conditions that many employers now face. I hope that the scheme will be taken up widely.
I made it clear in my Budget speech that I wished to encourage savings and I introduced incentives to do so. I know very well the difficulties that many people face with interest rates. I wish that it were possible to promise that interest rates would come down again soon. I cannot promise that they will do so and nor can I rule out a further rise if I judge that necessary. If they have to rise, they will rise. I can promise the House, however, that interest rates are working. They are encouraging saving and discouraging spending and borrowing. I have no doubt that they will get the economy back on track, and in the time scale that I set out in the Budget judgment. Opposition Members who doubt that should not underestimate the crucial importance of savings. Higher saving is not merely a short-time objective. On the contrary, I believe that high levels of saving will be extremely important throughout the 1990s if the British economy is to compete as it should.
If there is a high level of savings, we can sustain a high level of investment, which we all wish to do. The tax changes add considerably to the armoury of measures already in the system to encourage saving, and which have already resulted in massive culture changes in British society. Some 11 million shareholders and millions of other people will, I hope and believe, be able to save free from the victimisation that they suffered under the policies of the Labour Government. I find it ironic that Opposition Members mock the savings incentives in the Budget. Let people be warned—if there is ever a Labour Government again, the savers can forget about keeping up with inflation or obtaining a decent return on their money.
We hear a great deal about how the Opposition have changed. The right hon. and learned Member for Monklands, East and his loyal lieutenant the hon. Member for Dunfermline, East tell us, in every newspaper that we open, that Labour has changed and that as they lunch their way around the City, as they do day after day, they are finding a very appreciative audience. [Interruption.] They look very good on it. They sit on the Front Bench, the house pets of the board room in the 1990s. I have no doubt that the right hon. and learned Gentleman is an extremely entertaining lunchtime companion. We have never questioned his entertainment value, but I wonder whether he is deluding himself about the esteem in which he is held. I was amused by an article by the City firm Goldman Sachs—which is not exactly run by closet Conservatives—entitled:
Meeting the Challenge?—Labour's Policy".
Goldman Sachs said that it did not very much like what it had seen of the right hon. and learned Gentleman's policies. It said:
Monetary, fiscal and exchange policy will be used to promote the competitiveness of British industry … This implies a willingness to depreciate.
They are devaluers today just as they always were. Indeed, the policy review states that Labour will end the reliance on high interest rates and an uncompetitive currency. Goldman Sachs concludes:
this seems to undermine Labour's commitment to join the exchange rate mechanism of the EMS and to threaten its counter inflationary policy.
Indeed it does. Labour has no counter-inflation policy.
The problem with Labour's economic policy is the lack of any means to control inflation. There is no incentive for people to control costs. Labour is now in the age of glitznost—let the glitter be the substance. There has been a great deal of fraud and a few facts during the debate. My right hon. and hon. Friends should make no mistake—we


have seen all that we are going to see of Labour's plans to deal with inflation. On that they are implementing Labour's election strategy—smarten up and shut up.
How many basic rate tax payers will be worse off? Labour Members will not say. How many people will suffer from the increase in the national insurance ceiling? They will not say. How much will people lose by the loss of the married couples allowance? They will not say. That is the reality. They will not vote for a policy that will reduce inflation and recreate growth. In this Budget we have a policy to bring down inflation and to create growth. I commend it to the House.

Question put:—

The House divided: Ayes 338, Noes 228.

Division No. 139]
[9.59 pm


AYES


Adley, Robert
Chope, Christopher


Aitken, Jonathan
Clark, Hon Alan (Plym'th S'n)


Alexander, Richard
Clark, Dr Michael (Rochford)


Alison, Rt Hon Michael
Clark, Sir W. (Croydon S)


Allason, Rupert
Clarke, Rt Hon K. (Rushcliffe)


Amery, Rt Hon Julian
Colvin, Michael


Amess, David
Conway, Derek


Amos, Alan
Coombs, Anthony (Wyre F'rest)


Arbuthnot, James
Coombs, Simon (Swindon)


Arnold, Jacques (Gravesham)
Cope, Rt Hon John


Arnold, Tom (Hazel Grove)
Cormack, Patrick


Ashby, David
Couchman, James


Aspinwall, Jack
Cran, James


Atkins, Robert
Critchley, Julian


Atkinson, David
Currie, Mrs Edwina


Baker, Rt Hon K. (Mole Valley)
Curry, David


Baker, Nicholas (Dorset N)
Davies, Q. (Stamf'd &amp; Spald'g)


Baldry, Tony
Davis, David (Boothferry)


Banks, Robert (Harrogate)
Day, Stephen


Batiste, Spencer
Devlin, Tim


Beaumont-Dark, Anthony
Dickens, Geoffrey


Bellingham, Henry
Dorrell, Stephen


Bendall, Vivian
Douglas-Hamilton, Lord James


Bennett, Nicholas (Pembroke)
Dover, Den


Benyon, W.
Dunn, Bob


Bevan, David Gilroy
Dykes, Hugh


Biffen, Rt Hon John
Eggar, Tim


Body, Sir Richard
Emery, Sir Peter


Bonsor, Sir Nicholas
Evans, David (Welwyn Hatf'd)


Boscawen, Hon Robert
Evennett, David


Boswell, Tim
Fairbairn, Sir Nicholas


Bottomley, Peter
Fallon, Michael


Bottomley, Mrs Virginia
Farr, Sir John


Bowden, A (Brighton K'pto'n)
Favell, Tony


Bowden, Gerald (Dulwich)
Fenner, Dame Peggy


Bowis, John
Field, Barry (Isle of Wight)


Boyson, Rt Hon Dr Sir Rhodes
Finsberg, Sir Geoffrey


Braine, Rt Hon Sir Bernard
Fishburn, John Dudley


Brandon-Bravo, Martin
Fookes, Dame Janet


Brazier, Julian
Forman, Nigel


Bright, Graham
Forth, Eric


Brown, Michael (Brigg &amp; Cl't's)
Fowler, Rt Hon Sir Norman


Bruce, Ian (Dorset South)
Fox, Sir Marcus


Budgen, Nicholas
Franks, Cecil


Burns, Simon
Freeman, Roger


Burt, Alistair
French, Douglas


Butcher, John
Fry, Peter


Butler, Chris
Gale, Roger


Butterfill, John
Gardiner, George


Carlisle, John, (Luton N)
Garel-Jones, Tristan


Carlisle, Kenneth (Lincoln)
Gilmour, Rt Hon Sir Ian


Carrington, Matthew
Glyn, Dr Sir Alan


Carttiss, Michael
Goodhart, Sir Philip


Cash, William
Goodson-Wickes, Dr Charles


Chalker, Rt Hon Mrs Lynda
Gorman, Mrs Teresa


Channon, Rt Hon Paul
Gorst, John


Chapman, Sydney
Gow, Ian





Grant, Sir Anthony (CambsSW)
Maclean, David


Greenway, Harry (Ealing N)
McLoughlin, Patrick


Greenway, John (Ryedale)
McNair-Wilson, Sir Michael


Gregory, Conal
McNair-Wilson, Sir Patrick


Griffiths, Peter (Portsmouth N)
Madel, David


Grist, Ian
Major, Rt Hon John


Ground, Patrick
Malins, Humfrey


Grylls, Michael
Mans, Keith


Hague, William
Maples, John


Hamilton, Neil (Tatton)
Marland, Paul


Hampson, Dr Keith
Marlow, Tony


Hanley, Jeremy
Marshall, John (Hendon S)


Hannam, John
Marshall, Michael (Arundel)


Hargreaves, A. (B'ham H'll Gr')
Mates, Michael


Hargreaves, Ken (Hyndburn)
Maude, Hon Francis


Harris, David
Mawhinney, Dr Brian


Haselhurst, Alan
Maxwell-Hyslop, Robin


Hawkins, Christopher
Mayhew, Rt Hon Sir Patrick


Hayes, Jerry
Mellor, David


Hayhoe, Rt Hon Sir Barney
Meyer, Sir Anthony


Hayward, Robert
Miller, Sir Hal


Heath, Rt Hon Edward
Mills, Iain


Heathcoat-Amory, David
Miscampbell, Norman


Heseltine, Rt Hon Michael
Mitchell, Andrew (Gedling)


Hicks, Mrs Maureen (Wolv' NE)
Mitchell, Sir David


Hicks, Robert (Cornwall SE)
Moate, Roger


Higgins, Rt Hon Terence L.
Montgomery, Sir Fergus


Hind, Kenneth
Moore, Rt Hon John


Hogg, Hon Douglas (Gr'th'm)
Morris, M (N'hampton S)


Holt, Richard
Morrison, Sir Charles


Hordern, Sir Peter
Morrison, Rt Hon P (Chester)


Howard, Rt Hon Michael
Moss, Malcolm


Howarth, Alan (Strat'd-on-A)
Moynihan, Hon Colin


Howarth, G. (Cannock &amp; B'wd)
Mudd, David


Howe, Rt Hon Sir Geoffrey
Neale, Gerrard


Howell, Rt Hon David (G'dford)
Nelson, Anthony


Howell, Ralph (North Norfolk)
Neubert, Michael


Hughes, Robert G. (Harrow W)
Newton, Rt Hon Tony


Hunt, David (Wirral W)
Nicholls, Patrick


Hunt, Sir John (Ravensbourne)
Nicholson, David (Taunton)


Hunter, Andrew
Nicholson, Emma (Devon West)


Hurd, Rt Hon Douglas
Norris, Steve


Irvine, Michael
Onslow, Rt Hon Cranley


Irving, Sir Charles
Oppenheim, Phillip


Jack, Michael
Page, Richard


Janman, Tim
Parkinson, Rt Hon Cecil


Jessel, Toby
Patnick, Irvine


Johnson Smith, Sir Geoffrey
Patten, Rt Hon Chris (Bath)


Jones, Gwilym (Cardiff N)
Patten, Rt Hon John


Jopling, Rt Hon Michael
Pattie, Rt Hon Sir Geoffrey


Kellett-Bowman, Dame Elaine
Pawsey, James


Key, Robert
Porter, David (Waveney)


Kilfedder, James
Portillo, Michael


King, Roger (B'ham N'thfield)
Powell, William (Corby)


Kirkhope, Timothy
Price, Sir David


Knapman, Roger
Raffan, Keith


Knight, Greg (Derby North)
Raison, Rt Hon Timothy


Knight, Dame Jill (Edgbaston)
Rathbone, Tim


Knowles, Michael
Redwood, John


Knox, David
Renton, Rt Hon Tim


Lamont, Rt Hon Norman
Rhodes James, Robert


Lang, Ian
Riddick, Graham


Latham, Michael
Ridley, Rt Hon Nicholas


Lawrence, Ivan
Ridsdale, Sir Julian


Lawson, Rt Hon Nigel
Rifkind, Rt Hon Malcolm


Lee, John (Pendle)
Roberts, Wyn (Conwy)


Leigh, Edward (Gainsbor'gh)
Roe, Mrs Marion


Lennox-Boyd, Hon Mark
Rossi, Sir Hugh


Lester, Jim (Broxtowe)
Rost, Peter


Lightbown, David
Rowe, Andrew


Lilley, Peter
Rumbold, Mrs Angela


Lloyd, Sir Ian (Havant)
Ryder, Richard


Lloyd, Peter (Fareham)
Sackville, Hon Tom


Lord, Michael
Sainsbury, Hon Tim


Luce, Rt Hon Richard
Sayeed, Jonathan


Lyell, Rt Hon Sir Nicholas
Scott, Rt Hon Nicholas


McCrindle, Robert
Shaw, David (Dover)


Macfarlane, Sir Neil
Shaw, Sir Giles (Pudsey)


MacGregor, Rt Hon John
Shaw, Sir Michael (Scarb')


MacKay, Andrew (E Berkshire)
Shephard, Mrs G. (Norfolk SW)






Shepherd, Colin (Hereford)
Townsend, Cyril D. (B'heath)


Shepherd, Richard (Aldridge)
Tracey, Richard


Shersby, Michael
Tredinnick, David


Skeet, Sir Trevor
Trippier, David


Smith, Tim (Beaconsfield)
Trotter, Neville


Soames, Hon Nicholas
Twinn, Dr Ian


Speed, Keith
Vaughan, Sir Gerard


Speller, Tony
Viggers, Peter


Spicer, Sir Jim (Dorset W)
Waddington, Rt Hon David


Spicer, Michael (S Worcs)
Wakeham, Rt Hon John


Squire, Robin
Walden, George


Stanbrook, Ivor
Waller, Gary


Stanley, Rt Hon Sir John
Walters, Sir Dennis


Stern, Michael
Ward, John


Stevens, Lewis
Wardle, Charles (Bexhill)


Stewart, Allan (Eastwood)
Warren, Kenneth


Stewart, Andy (Sherwood)
Watts, John


Stewart, Rt Hon Ian (Herts N)
Wells, Bowen


Stokes, Sir John
Wheeler, Sir John


Stradling Thomas, Sir John
Whitney, Ray


Sumberg, David
Widdecombe, Ann


Summerson, Hugo
Wiggin, Jerry


Tapsell, Sir Peter
Winterton, Mrs Ann


Taylor, Ian (Esher)
Winterton, Mrs Ann


Taylor, John M (Solihull)
Wolfson, Mark


Taylor, Teddy (S'end E)
Wood, Timothy


Tebbit, Rt Hon Norman
Woodcock, Dr. Mike


Temple-Morris, Peter
Yeo, Tim


Thatcher, Rt Hon Margaret
Young, Sir George (Acton)


Thompson, D. (Calder Valley)
Younger, Rt Hon George


Thompson, Patrick (Norwich N)



Thorne, Neil
Tellers for the Ayes:


Thurnham, Peter
Mr. Alistair Goodlad and Mr. Tony Durant.


Townend, John (Bridlington)





NOES


Abbott, Ms Diane
Cook, Frank (Stockton N)


Adams, Allen (Paisley N)
Cook, Robin (Livingston)


Allen, Graham
Corbett, Robin


Alton, David
Corbyn, Jeremy


Anderson, Donald
Cousins, Jim


Archer, Rt Hon Peter
Cox, Tom


Armstrong, Hilary
Crowther, Stan


Ashdown, Rt Hon Paddy
Cryer, Bob


Ashley, Rt Hon Jack
Cummings, John


Ashton, Joe
Cunliffe, Lawrence


Banks, Tony (Newham NW)
Cunningham, Dr John


Barnes, Harry (Derbyshire NE)
Dalyell, Tam


Barnes, Mrs Rosie (Greenwich)
Darling, Alistair


Barron, Kevin
Davies, Rt Hon Denzil (Llanelli)


Battle, John
Davies, Ron (Caerphilly)


Beckett, Margaret
Davis, Terry (B'ham Hodge H'l)


Beith, A. J.
Dewar, Donald


Bell, Stuart
Dixon, Don


Benn, Rt Hon Tony
Dobson, Frank


Bennett, A. F. (D'nt'n &amp; R'dish)
Doran, Frank


Bermingham, Gerald
Duffy, A. E. P.


Bidwell, Sydney
Dunnachie, Jimmy


Blair, Tony
Dunwoody, Hon Mrs Gwyneth


Boateng, Paul
Eadie, Alexander


Boyes, Roland
Evans, John (St Helens N)


Bradley, Keith
Ewing, Harry (Falkirk E)


Bray, Dr Jeremy
Ewing, Mrs Margaret (Moray)


Brown, Gordon (D'mline E)
Fatchett, Derek


Brown, Nicholas (Newcastle E)
Faulds, Andrew


Brown, Ron (Edinburgh Leith)
Fearn, Ronald


Buckley, George J.
Field, Frank (Birkenhead)


Caborn, Richard
Fields, Terry (L'pool B G'n)


Callaghan, Jim
Fisher, Mark


Campbell, Menzies (Fife NE)
Flannery, Martin


Campbell, Ron (Blyth Valley)
Flynn, Paul


Campbell-Savours, D. N.
Foot, Rt Hon Michael


Carlile, Alex (Mont'g)
Foster, Derek


Cartwright, John
Foulkes, George


Clark, Dr David (S Shields)
Fraser, John


Clarke, Tom (Monklands W)
Fyfe, Maria


Clay, Bob
Galloway, George


Clelland, David
Garrett, John (Norwich South)


Clwyd, Mrs Ann
George, Bruce


Cohen, Harry
Godman, Dr Norman A.





Golding, Mrs Llin
Mowlam, Marjorie


Gordon, Mildred
Mullin, Chris


Gould, Bryan
Murphy, Paul


Graham, Thomas
Nellist, Dave


Grant, Bernie (Tottenham)
Oakes, Rt Hon Gordon


Griffiths, Nigel (Edinburgh S)
O'Brien, William


Griffiths, Win (Bridgend)
O'Neill, Martin


Grocott, Bruce
Orme, Rt Hon Stanley


Hardy, Peter
Owen, Rt Hon Dr David


Harman, Ms Harriet
Patchett, Terry


Hattersley, Rt Hon Roy
Pendry, Tom


Healey, Rt Hon Denis
Pike, Peter L.


Henderson, Doug
Powell, Ray (Ogmore)


Hinchliffe, David
Prescott, John


Hoey, Ms Kate (Vauxhall)
Primarolo, Dawn


Hogg. N. (C'nauld &amp; Kilsyth)
Quin, Ms Joyce


Home Robertson, John
Radice, Giles


Hood, Jimmy
Randall, Stuart


Howarth, George (Knowsley N)
Redmond, Martin


Howell, Rt Hon D. (S'heath)
Rees, Rt Hon Merlyn


Howells, Geraint
Richardson, Jo


Howells, Dr. Kim (Pontypridd)
Robertson, George


Hoyle, Doug
Robinson, Peter (Belfast E)


Hughes, John (Coventry NE)
Rogers, Allan


Hughes, Robert (Aberdeen N)
Rooker, Jeff


Hughes, Roy (Newport E)
Ross, Ernie (Dundee W)


Hughes, Simon (Southwark)
Rowlands, Ted


Illsley, Eric
Ruddock, Joan


Janner, Greville
Salmond, Alex


Jones, Barry (Alyn &amp; Deeside)
Sedgemore, Brian


Jones, Ieuan (Ynys Môn)
Sheerman, Barry


Jones, Martyn (Clwyd S W)
Sheldon, Rt Hon Robert


Kaufman, Rt Hon Gerald
Shore, Rt Hon Peter


Kennedy, Charles
Short, Clare


Kinnock, Rt Hon Neil
Skinner, Dennis


Kirkwood, Archy
Smith, Andrew (Oxford E)


Lamond, James
Smith, C. (Isl'ton &amp; F'bury)


Leadbitter, Ted
Smith, Rt Hon J. (Monk'ds E)


Leighton, Ron
Smith, J. P. (Vale of Glam)


Lewis, Terry
Snape, Peter


Litherland, Robert
Soley, Clive


Livingstone, Ken
Spearing, Nigel


Livsey, Richard
Steel, Rt Hon Sir David


Lloyd, Tony (Stretford)
Steinberg, Gerry


Lofthouse, Geoffrey
Stott, Roger


Loyden, Eddie
Strang, Gavin


McAllion, John
Straw, Jack


McAvoy, Thomas
Taylor, Mrs Ann (Dewsbury)


McCartney, Ian
Thompson, Jack (Wansbeck)


Macdonald, Calum A.
Turner, Dennis


McFall, John
Vaz, Keith


McKay, Allen (Barnsley West)
Wall, Pat


McKelvey, William
Wallace, James


Maclennan, Robert
Walley, Joan


McNamara, Kevin
Wardell, Gareth (Gower)


McWilliam, John
Wareing, Robert N.


Madden, Max
Watson, Mike (Glasgow, C)


Mahon, Mrs Alice
Welsh, Andrew (Angus E)


Marek, Dr John
Welsh, Michael (Doncaster N)


Marshall, Jim (Leicester S)
Wigley, Dafydd


Martin, Michael J. (Springburn)
Williams, Rt Hon Alan


Martlew, Eric
Williams, Alan W. (Carm'then)


Maxton, John
Wilson, Brian


Meacher, Michael
Winnick, David


Meale, Alan
Wise, Mrs Audrey


Michie, Bill (Sheffield Heeley)
Worthington, Tony


Michie, Mrs Ray (Arg'l &amp; Bute)
Wray, Jimmy


Moonie, Dr Lewis
Young, David (Bolton SE)


Morgan, Rhodri



Morley, Elliot
Tellers for the Noes:


Morris, Rt Hon A. (W'shawe)
Mr. Frank Haynes and


Morris, Rt Hon J. (Aberavon)
Mr. Ken Eastham.

Question accordingly agreed to.

Resolved,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—



(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description.

Mr. Speaker: I am now required under Standing Order No. 50(3) to put successively, without further debate, the Question on each of the ways and means motions, on the motions for procedure and the money resolution on the Finance Bill.

2. SPIRITS

Resolved,
That, as from 6 o'clock in the evening of 20th March 1990, the rate of duty specified in section 5 of the Alcoholic Liquor Duties Act 1979 shall be increased from £15·77 per litre of alcohol in the spirits to £17·35 per litre of alcohol in the spirits.


Description of wine or made-wine
Rates of duty per hectolitre



£


Wine or made-wine of a strength less than 2 per cent.
11·03


Wine or made-wine of a strength exceeding 2 per cent. but not exceeding 3 per cent.
18·38


Wine or made-wine of a strength exceeding 3 per cent. but not exceeding 4 per cent.
25·73


Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5 per cent.
33·09


Wine or made-wine of a strength exceeding 5 per cent. but not exceeding 5·5 per cent.
40·44


Wine or made-wine of a strength exceeding 5·5 per cent. but not exceeding 15 per cent. and not being sparkling
110·28


Sparkling wine or sparkling made-wine of a strength exceeding 5·5 per cent. but not exceeding 15 per cent.
182·10


Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 18 per cent.
190·20


Wine or made-wine of a strength exceeding 18 per cent. but not exceeding 22 per cent.
219·40


Wine or made-wine of a strength exceeding 22 per cent.
219·40



plus £17·35 for every 1 per cent. or part of 1 per cent. in excess of 22 per cent.


And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

5. CIDER

Resolved,
That, as from 6 o'clock in the evening of 20th March 1990, the rate of duty specified in section 62(1) of the Alcoholic Liquor Duties Act 1979 shall be increased from £17·33 per hectolitre to £18·66 per hectolitre.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

6. TOBACCO PRODUCTS

Resolved,
That, as from 23rd March 1990, the rates of duty on cigarettes. cigars and hand-rolling tobacco specified in Schedule 1 to the Tobacco Products Duty Act 1979 shall be increased—

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

3. BEER

Resolved,
That, as from 6 o'clock in the evening of 20th March 1990, the rate of duty specified in section 36 of the Alcoholic Duties Act 1979 shall be increased from £0·90 per hectolitre for every degree by which the original gravity of beer exceeds 1,000 degrees to £·97 per hectolitre for every such degree.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

4. WINE AND MADE-WINE

Resolved,
That, as from 6 o'clock in the evening of 20th March 1990, the rates of duty under sections 54 and 55 of the Alcoholic Liquor Duties Act 1979 shall be as follows—

(a) in the case of cigarettes, to an amount equal to 21 per cent. of the retail price plus £34·91 per thousand cigarettes;
(b) in the case of cigars, to £53·67 per kilogram; and
(c) in the case of hand-rolling tobacco, to £56·63 per kilogram.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

7. HYDROCARBON OIL

Motion made, and Question put,
That, as from 6 o'clock in the evening of 20th March 1990—
(1) The rates of duty specified in subsection (1) of section 6 of the Hydrocarbon Oil Duties Act 1979 shall be increased—

(a) in the case of light oil, from £0·2044 a litre to £0·2248 a litre; and


(b) in the case of heavy oil, from £0·1729 a litre to £0·1902 a litre.

(2) Subsection (2A) of that section (special rate of duty on petrol below 4 star) shall cease to have effect.
(3) The rates of rebate of duty specified in subsection 11(1) of that Act shall be increased—

(a) in the case of fuel oil, from £0·0077 a litre to £0·0083 a litre; and
(b) in the case of gas oil, from £0·0110 a litre to £0·0118 a litre.

(4) The rate of rebate of duty specified m section 13A(1) of that Act (unleaded petrol) shall be increased from £0·0272 a litre to £0·0299 a litre.
(5) The rate of rebate of duty specified in section 14(1) of that Act (light oil for use as furnace oil) shall be increased from £0·0077 a litre to £0·0083 a litre.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Salmond.]

The House divided: Ayes 340, Noes 13.

Division No. 140]
[10.18 pm


AYES


Adley, Robert
Chope, Christopher


Aitken, Jonathan
Clark, Hon Alan (Plym'th S'n)


Alexander, Richard
Clark, Dr Michael (Rochford)


Alison, Rt Hon Michael
Clark, Sir W. (Croydon S)


Allason, Rupert
Clarke, Rt Hon K. (Rushcliffe)


Amery, Rt Hon Julian
Colvin, Michael


Amess, David
Conway, Derek


Amos, Alan
Coombs, Anthony (Wyre F'rest)


Arbuthnot, James
Coombs, Simon (Swindon)


Arnold, Jacques (Gravesham)
Cope, Rt Hon John


Arnold, Tom (Hazel Grove)
Cormack, Patrick


Ashby, David
Couchman, James


Aspinwall, Jack
Cran, James


Atkins, Robert
Critchley, Julian


Atkinson, David
Currie, Mrs Edwina


Baker, Rt Hon K. (Mole Valley)
Curry, David


Baldry, Tony
Davies, Q. (Stamf'd &amp; Spald'g)


Barnes, Mrs Rosie (Greenwich)
Davis, David (Boothferry)


Batiste, Spencer
Day, Stephen


Beaumont-Dark, Anthony
Devlin, Tim


Bellingham, Henry
Dickens, Geoffrey


Bendall, Vivian
Dorrell, Stephen


Bennett, Nicholas (Pembroke)
Douglas-Hamilton, Lord James


Benyon, W.
Dover, Den


Bevan. David Gilroy
Dunn, Bob


Biffen, Rt Hon John
Dykes, Hugh


Bonsor, Sir Nicholas
Eggar, Tim


Boscawen, Hon Robert
Emery, Sir Peter


Boswell, Tim
Evans, David (Welwyn Hatf'd)


Bottomley, Peter
Evennett, David


Bottomley, Mrs Virginia
Fairbairn, Sir Nicholas


Bowden, A (Brighton K'pto'n)
Fallon, Michael


Bowden, Gerald (Dulwich)
Farr, Sir John


Bowis, John
Favell, Tony


Boyson, Rt Hon Dr Sir Rhodes
Fenner, Dame Peggy


Braine, Rt Hon Sir Bernard
Field, Barry (Isle of Wight)


Brandon-Bravo, Martin
Finsberg, Sir Geoffrey


Brazier, Julian
Fishburn, John Dudley


Bright, Graham
Fookes, Dame Janet


Brown, Michael (Brigg &amp; Cl't's)
Forman, Nigel


Bruce, Ian (Dorset South)
Forth, Eric


Budgen, Nicholas
Fowler, Rt Hon Sir Norman


Burns, Simon
Fox, Sir Marcus


Burt, Alistair
Franks, Cecil


Butcher, John
Freeman, Roger


Butler, Chris
French, Douglas


Butterfill, John
Fry, Peter


Carlisle, John, (Luton N)
Gale, Roger


Carlisle, Kenneth (Lincoln)
Gardiner, George


Carrington, Matthew
Garel-Jones, Tristan


Carttiss, Michael
Gilmour, Rt Hon Sir Ian


Cartwright, John
Glyn, Dr Sir Alan


Cash, William
Goodhart, Sir Philip


Chalker, Rt Hon Mrs Lynda
Goodson-Wickes, Dr Charles


Channon, Rt Hon Paul
Gorman, Mrs Teresa


Chapman, Sydney
Gorst, John





Gow, Ian
Maclean, David


Grant, Sir Anthony (CambsSW)
McLoughlin, Patrick


Greenway, Harry (Ealing N)
McNair-Wilson, Sir Michael


Greenway, John (Ryedale)
McNair-Wilson, Sir Patrick


Gregory, Conal
Madel, David


Griffiths, Peter (Portsmouth N)
Major, Rt Hon John


Grist, Ian
Malins, Humfrey


Ground, Patrick
Mans, Keith


Grylls, Michael
Maples, John


Hague, William
Marland, Paul


Hamilton, Neil (Tatton)
Marshall, John (Hendon S)


Hampson, Dr Keith
Marshall, Michael (Arundel)


Hanley, Jeremy
Mates, Michael


Hannam, John
Maude, Hon Francis


Hargreaves, A. (B'ham H'll Gr')
Mawhinney, Dr Brian


Hargreaves, Ken (Hyndburn)
Maxwell-Hyslop, Robin


Harris, David
Mayhew, Rt Hon Sir Patrick


Haselhurst, Alan
Mellor, David


Hawkins, Christopher
Meyer, Sir Anthony


Hayes, Jerry
Miller, Sir Hal


Hayhoe, Rt Hon Sir Barney
Mills, Iain


Hayward, Robert
Miscampbell, Norman


Heath, Rt Hon Edward
Mitchell, Andrew (Gedling)


Heathcoat-Amory, David
Mitchell, Sir David


Heseltine, Rt Hon Michael
Moate, Roger


Hicks, Mrs Maureen (Wolv' NE)
Montgomery, Sir Fergus


Hicks, Robert (Cornwall SE)
Moore, Rt Hon John


Higgins, Rt Hon Terence L.
Morris, M (N'hampton S)


Hind, Kenneth
Morrison, Sir Charles


Hogg, Hon Douglas (Gr'th'm)
Morrison, Rt Hon P (Chester)


Holt, Richard
Moss, Malcolm


Hordern, Sir Peter
Moynihan, Hon Colin


Howard, Rt Hon Michael
Mudd, David


Howarth, Alan (Strat'd-on-A)
Neale, Gerrard


Howarth, G. (Cannock &amp; B'wd)
Nelson, Anthony


Howe, Rt Hon Sir Geoffrey
Neubert, Michael


Howell, Rt Hon David (G'dford)
Newton, Rt Hon Tony


Howell, Ralph (North Norfolk)
Nicholls, Patrick


Hughes, Robert G. (Harrow W)
Nicholson, David (Taunton)


Hunt, David (Wirral W)
Nicholson, Emma (Devon West)


Hunt, Sir John (Ravensbourne)
Norris, Steve


Hunter, Andrew
Onslow, Rt Hon Cranley


Hurd, Rt Hon Douglas
Oppenheim, Phillip


Irvine, Michael
Owen, Rt Hon Dr David


Irving, Sir Charles
Page, Richard


Jack, Michael
Parkinson, Rt Hon Cecil


Janman, Tim
Patnick, Irvine


Jessel, Toby
Patten, Rt Hon Chris (Bath)


Johnson Smith, Sir Geoffrey
Patten, Rt Hon John


Jones, Gwilym (Cardiff N)
Pattie, Rt Hon Sir Geoffrey


Jopling, Rt Hon Michael
Pawsey, James


Kellett-Bowman, Dame Elaine
Porter, Barry (Wirral S)


Key, Robert
Porter, David (Waveney)


King, Roger (B'ham N'thfield)
Portillo, Michael


Kirkhope, Timothy
Powell, William (Corby)


Knapman, Roger
Price, Sir David


Knight, Greg (Derby North)
Raffan, Keith


Knight, Dame Jill (Edgbaston)
Raison, Rt Hon Timothy


Knowles, Michael
Rathbone, Tim


Knox, David
Redwood, John


Lamont, Rt Hon Norman
Renton, Rt Hon Tim


Lang, Ian
Rhodes James, Robert


Latham, Michael
Riddick, Graham


Lawrence, Ivan
Ridley, Rt Hon Nicholas


Lawson, Rt Hon Nigel
Ridsdale, Sir Julian


Lee, John (Pendle)
Rifkind, Rt Hon Malcolm


Leigh, Edward (Gainsbor'gh)
Roberts, Wyn (Conwy)


Lennox-Boyd, Hon Mark
Roe, Mrs Marion


Lester, Jim (Broxtowe)
Rossi, Sir Hugh


Lightbown, David
Rost, Peter


Lilley, Peter
Rowe, Andrew


Lloyd, Sir Ian (Havant)
Rumbold, Mrs Angela


Lloyd, Peter (Fareham)
Ryder, Richard


Lord, Michael
Sackville, Hon Tom


Luce, Rt Hon Richard
Sainsbury, Hon Tim


Lyell, Rt Hon Sir Nicholas
Sayeed, Jonathan


McCrindle, Robert
Scott, Rt Hon Nicholas


Macfarlane, Sir Neil
Shaw, David (Dover)


MacGregor, Rt Hon John
Shaw, Sir Giles (Pudsey)


MacKay, Andrew (E Berkshire)
Shaw, Sir Michael (Scarb')






Shephard, Mrs G. (Norfolk SW)
Taylor, Ian (Esher)


Shepherd, Colin (Hereford)
Taylor, John M (Solihull)


Shepherd, Richard (Aldridge)
Taylor, Teddy (S'end E)


Shersby, Michael
Tebbit, Rt Hon Norman


Skeet, Sir Trevor
Temple-Morris, Peter


Smith, Tim (Beaconsfield)
Thatcher, Rt Hon Margaret


Soames, Hon Nicholas
Thompson, D. (Calder Valley)


Speed, Keith
Thompson, Patrick (Norwich N)


Speller, Tony
Thorne, Neil


Spicer, Sir Jim (Dorset W)
Thurnham, Peter


Spicer, Michael (S Worcs)
Townend, John (Bridlington)


Squire, Robin
Townsend, Cyril D. (B'heath)


Stanbrook, Ivor
Tracey, Richard


Stanley, Rt Hon Sir John
Tredinnick, David


Stern, Michael
Trippier, David


Stevens, Lewis
Trotter, Neville


Stewart, Allan (Eastwood)
Twinn, Dr Ian


Stewart, Andy (Sherwood)
Vaughan, Sir Gerard


Stewart, Rt Hon Ian (Herts N)
Viggers, Peter


Stokes, Sir John
Waddington, Rt Hon David


Stradling Thomas, Sir John
Wakeham, Rt Hon John


Sumberg, David
Walden, George


Summerson, Hugo
Waller, Gary


Tapsell, Sir Peter
Walters, Sir Dennis





Ward, John
Wolfson, Mark


Wardle, Charles (Bexhill)
Wood, Timothy


Warren, Kenneth
Woodcock, Dr. Mike


Watts, John
Yeo, Tim


Wells, Bowen
Young, Sir George (Acton)


Wheeler, Sir John
Younger, Rt Hon George


Whitney, Ray



Widdecombe, Ann
Tellers for the Ayes:


Wiggin, Jerry
Mr. Alastair Goodlad and


Winterton, Mrs Ann
Mr. Tony Durant.


Winterton, Nicholas





NOES


Corbyn, Jeremy
Salmond, Alex


Cryer, Bob
Skinner, Dennis


Ewing, Mrs Margaret (Moray)
Smyth, Rev Martin (Belfast S)


Hughes, John (Coventry NE)
Wigley, Dafydd


Kilfedder, James



Molyneaux, Rt Hon James
Tellers for the Noes:


Nellist, Dave
Mr. Andrew Welsh and


Robinson, Peter (Belfast E)
Mr. Ieuan Wyn Jones.


Ross, William (Londonderry E)

Question accordingly agreed to.

8. VEHICLES EXCISE DUTY (RATES)

Resolved,
That the Vehicles (Excise) Act 1971 ("the 1971 Act") and the Vehicles (Excise) Act (Northern Ireland) 1972 ("the 1972 Act") shall have effect, in relation to licences taken out after 20th March 1990, with the amendments set out below.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
(1) In Schedule 3 to each Act (annual rates of duty on haulage vehicles)—

TABLE A


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12,000 KILOGRAMS PLATED GROSS WEIGHT GENERAL RATES


Plated gross weight of vehicle
Rate of duty


(1)
(2)
(3)
(4)
(5)


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


kgs
kgs
£
£
£


12,000
13,000
450·00
470·00
340·00


13,000
14,000
630·00
470·00
340·00


14,000
15,000
810·00
470·00
340·00


15,000
17,000
1,280·00
470·00
340·00


17,000
19,000
—
820·00
340·00


19,000
21,000
—
990·00
340·00


21,000
23,000
—
1,420·00
490·00


23,000
25,000
—
2,160·00
800·00


25,000
27,000
—
—
1,420·00


27,000
29,000
—
—
2,240·00


29,000
30,490
—
—
3,250·00

TABLE A(1)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12,000 KILOGRAMS PLATED GROSS WEIGHT RATES FOR FARMERS' GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


kgs
kgs
£
£
£


12,000
13,000
270·00
280·00
205·00


13,000
14,000
380·00
280·00
205·00


14,000
15,000
490·00
280·00
205·00


15,000
17,000
770·00
280·00
205·00


17,000
19,000
—
490·00
205·00


19,000
21,000
—
595·00
205·00


21,000
23,000
—
850·00
295·00


23,000
25,000
—
1,295·00
480·00


25,000
27,000
—
—
850·00


27,000
29,000
—
—
1,345·00


29,000
30,490
—
—
1,950·00

(a) in paragraph 1 of Part I, for the words from "according" to the end there shall be substituted the words "be the rate specified in relation to vehicles of that description in the second column of that Part"; and
(b) for the Table set out in Part II there shall be substituted the Table set out below:

Description of vehicle
Rate of duty



£


1. Special machines
16·00


2. Haulage vehicles, being showmen's vehicles
90·00


3. Haulage vehicles, not being showmen's vehicles
330·00


4. Recovery vehicles
50·00

(2) For the Tables set out in Part II of Schedule 4 to the 1971 Act there shall be substituted the Tables set out below:

TABLE A(2)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12,000 KILOGRAMS PLATED GROSS WEIGHT RATES FOR SHOWMEN'S GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


kgs
kgs
£
£
£


12,000
13,000
115·00
120·00
90·00


13,000
14,000
160·00
120·00
90·00


14,000
15,000
205·00
120·00
90·00


15,000
17,000
320·00
120·00
90·00


17,000
19,000
—
205·00
90·00


19,000
21,000
—
250·00
90·00


21,000
23,000
—
355·00
125·00


23,000
25,000
—
540·00
200·00


25,000
27,000
—
—
355·00


27,000
29,000
—
—
560·00


29,000
30,490
—
—
815·00

TABLE B


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12,000 KILOGRAMS PLATED


GROSS WEIGHT USED FOR DRAWING TRAILERS EXCEEDING 4,000 KILOGRAMS PLATED GROSS WEIGHT GENERAL RATES


Plated gross weight of trailer



Exceeding
Not exceeding
Duty supplement


kgs
kgs
£


4,000
8,000
130·00


8,000
10,000
130·00


10,000
12,000
130·00


12,000
14,000
360·00


14,000
—
360·00

TABLE B(1)


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12,000 KILOGRAMS PLATED


GROSS WEIGHT USED FOR DRAWING TRAILERS EXCEEDING 4,000 KILOGRAMS PLATED GROSS WEIGHT


RATES FOR FARMERS' GOODS VEHICLES


Plated gross weight of trailer



Exceeding
Not exceeding
Duty supplement


kgs
kgs
£


4,000
8,000
130·00


8,000
10,000
130·00


10,000
12,000
130·00


12,000
14,000
360·00


14,000
—
360·00

TABLE B(2)


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12,000 KILOGRAMS PLATED


GROSS WEIGHT USED FOR DRAWING TRAILERS EXCEEDING 4,000 KILOGRAMS PLATED GROSS WEIGHT


RATES FOR SHOWMEN'S GOODS VEHICLES


Plated gross weight of trailer



Exceeding
Not exceeding
Duty supplement


kgs
kgs
£


—
—
80·00

TABLE C


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12,000 KILOGRAMS PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


GENERAL RATES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


kgs
kgs
£
£
£


12,000
14,000
440·00
440·00
440·00


14,000
16,000
440·00
440·00
440·00


16,000
18,000
500·00
440·00
440·00


18,000
20,000
500·00
440·00
440·00


20,000
22,000
780·00
440·00
440·00


22,000
23,000
780·00
440·00
440·00


23,000
25,000
1,150·00
570·00
440·00


25,000
26,000
1,150·00
570·00
440·00


26,000
28,000
1,150·00
1,090·00
440·00


28,000
29,000
1,680·00
1,680·00
1,050·00


29,000
31,000
1,680·00
1,680·00
1,050·00


31,000
33,000
2,450·00
2,450·00
1,680·00


33,000
34,000
2,450·00
2,450·00
1,680·00


34,000
36,000
2,750·00
2,750·00
2,750·00


36,000
38,000
3,100·00
3,100·00
3,100·00

TABLE C(1)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12,000 KILOGRAMS PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


RATES FOR FARMERS' GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


kgs
kgs
£
£
£


12,000
14,000
265·00
265·00
265·00


14,000
16,000
265·00
265·00
265·00


16,000
18,000
300·00
265·00
265·00


18,000
20,000
300·00
265·00
265·00


20,000
22,000
470·00
265·00
265·00


22,000
23,000
470·00
265·00
265·00


23,000
25,000
690·00
340·00
265·00


25,000
26,000
690·00
340·00
265·00


26,000
28,000
690·00
655·00
265·00


28,000
29,000
1,010·00
1,010·00
630·00


29,000
31,000
1,010·00
1,010·00
630·00


31,000
33,000
1,470·00
1,470·00
1,010·00


33,000
34,000
1,470·00
1,470·00
1,010·00


34,000
36,000
1,650·00
1,650·00
1,650·00


36,000
38,000
1,860·00
1,860·00
1,860·00

TABLE C(2)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12,000 KILOGRAMS PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


RATES FOR SHOWMEN'S GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


kgs
kgs
£
£
£


12,000
14,000
110·00
110·00
110·00


14,000
16,000
110·00
110·00
110·00


16,000
18,000
125·00
110·00
110·00


18,000
20,000
125·00
110·00
110·00


20,000
22,000
195·00
110·00
110·00


22,000
23,000
195·00
110·00
110·00


23,000
25,000
290·00
145·00
110·00


25,000
26,000
290·00
145·00
110·00


26,000
28,000
290·00
275·00
110·00


28,000
29,000
420·00
420·00
265·00


29,000
31,000
420·00
420·00
265·00


31,000
33,000
615·00
615·00
420·00


33,000
34,000
615·00
615·00
420·00


34,000
36,000
690·00
690·00
690·00


36,000
38,000
775·00
775·00
775·00

TABLE D


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12,000 KILOGRAMS PLATED TRAIN WEIGHT AND HAVING 3 OR MORE AXLES


GENERAL RATES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


kgs
kgs
£
£
£


12,000
14,000
440·00
440·00
440·00


14,000
16,000
440·00
440·00
440·00


16,000
18,000
440·00
440·00
440·00


18,000
20,000
440·00
440·00
440·00


20,000
22,000
440·00
440·00
440·00


22,000
23,000
440·00
440·00
440·00


23,000
25,000
570·00
440·00
440·00


25,000
26,000
570·00
440·00
440·00


26,000
28,000
1,090·00
440·00
440·00


28,000
29,000
1,680·00
640·00
440·00


29,000
31,000
1,680·00
640·00
440·00


31,000
33,000
2,450·00
970·00
440·00


33,000
34,000
2,450·00
1,420·00
550·00


34,000
36,000
2,450·00
2,030·00
830·00


36,000
38,000
2,730·00
2,730·00
1,240·00

TABLE D(1)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12,000 KILOGRAMS PLATED TRAIN WEIGHT AND HAVING THREE OR MORE AXLES


RATES FOR FARMERS' GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


kgs
kgs
£
£
£


12,000
14,000
265·00
265·00
265·00


14,000
16,000
265·00
265·00
265·00


16,000
18,000
265·00
265·00
265·00


18,000
20,000
265·00
265·00
265·00


20,000
22,000
265·00
265·00
265·00


22,000
23,000
265·00
265·00
265·00


23,000
25,000
340·00
265·00
265·00


25,000
26,000
340·00
265·00
265·00


26,000
28,000
655·00
265·00
265·00


28,000
29,000
1,010·00
385·00
265·00


29,000
31,000
1,010·00
385·00
265·00


31,000
33,000
1,470·00
580·00
265·00


33,000
34,000
1,470·00
850·00
330·00


34,000
36,000
1,470·00
1,220·00
500·00


36,000
38,000
1,640·00
1,640·00
745·00

TABLE D(2)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12,000 KILOGRAMS PLATED TRAIN WEIGHT AND HAVING 3 OR MORE AXLES


RATES FOR SHOWMEN'S GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


kgs
kgs
£
£
£


12,000
14,000
110·00
110·00
110·00


14,000
16,000
110·00
110·00
110·00


16,000
18,000
110·00
110·00
110·00


18,000
20,000
110·00
110·00
110·00


20,000
22,000
110·00
110·00
110·00


22,000
23,000
110·00
110·00
110·00


23,000
25,000
145·00
110·00
110·00


25,000
26,000
145·00
110·00
110·00


26,000
28,000
275·00
110·00
110·00


28,000
29,000
420·00
160·00
110·00


29,000
31,000
420·00
160·00
110·00


31,000
33,000
615·00
245·00
110·00


33,000
34,000
615·00
355·00
140·00


34,000
36,000
615·00
510·00
210·00


36,000
38,000
685·00
685·00
310·00

(3) The Tables set out above shall also be substituted for the Tables set out in Part II of Schedule 4 to the 1972 Act, but with the following modifications—

(a) for the words "plated gross weight", in each place where they occur, there shall be substituted the words "relevant maximum weight", and

(b) for the words "plated train weight", in each place where they occur, there shall be substituted the words "relevant maximum train weight".

(4) In paragraph 2 of Schedule 4A to each Act (annual rates of duty on vehicles used for carrying or drawing exceptional loads) for "£3,100" there shall be substituted "£3,250".

9. VEHICLES EXCISE DUTY (EXEMPTIONS)

Resolved,
That, as from 21st March 1990, section 4 of each of the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972 (exemptions) shall have effect with the amendments set out below.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

(1) In subsection (1) the following paragraph shall be inserted after paragraph (c)—

"(ca) veterinary ambulances;".

(2) In subsection (1) the following paragraphs shall be inserted after paragraph (k)—

"(ka) vehicles (other than mowing machines) neither constructed nor adapted for use nor used for the carriage of a driver or passenger;

(kb) vehicles (other than ambulances) used for the carriage of disabled persons by bodies for the time being recognised for the purposes of this paragraph by the Secretary of State;".

(3) The following subsections shall be inserted after subsection (1)—

"(1A) The Secretary of State shall recognise a body for the purposes of subsection (1)(kb) above if, on application made to him in such manner as he may specify, it appears to him that the body is concerned with the care of disabled persons.

(1B) The issue by the Secretary of State of a nil licence in respect of a mechanically propelled vehicle shall be treated, where the document is issued by virtue of paragraph (kb) of subsection (1) above, as recognition by him for the purposes of that paragraph of the body by reference to whose use of the vehicle the document is issued.

(1C) The Secretary of State may withdraw recognition of a body for the purposes of subsection (1)(kb) above if it appears to him that the body is no longer concerned with the care of disabled persons.

(1D) The reference in subsection (1B) above to the issue by the Secretary of State of a nil licence is a reference to the issue by him in accordance with regulations under this Act of a document which—

(a) is in the form of a vehicle licence, and
(b) has the word "NIL" marked in the space provided for indicating the amount of duty payable."

(4) In subsection (2) the following definitions shall be inserted before the definition of "road construction vehicle"—
'ambulance' means a vehicle which—

(a) is constructed or adapted for, and used for no other purpose than, the carriage of sick, injured or disabled persons to or from welfare centres or places where medical or dental treatment is given; and
(b) is readily identifiable as a vehicle used for the carriage of such persons by virtue of being marked 'Ambulance' on both sides;

'disabled person' means a person suffering from a physical or mental defect or disability;

'veterinary ambulance' means a vehicle which—



(a) is used for no other purpose than the carriage of sick or injured animals to or from places where veterinary treatment is given; and
(b) is readily identifiable as a vehicle used for the carriage of such animals by virtue of being marked 'Veterinary Ambulance' on both sides;".

10. VALUE ADDED TAX (REGISTRATION)

Resolved,

That—

(1) The Value Added Tax Act 1983 shall be amended as follows.

(2) for paragraph 1(1) to (3) of Schedule 1 (registration) there shall be substituted—

"(1) Subject to sub-paragraphs (3) to (5) below, a person who makes taxable supplies but is not registered becomes liable to be registered—

(a) at the end of any month, if the value of his taxable supplies in the period of one year then ending has exceeded £25,400; or
(b) at any time, if there are reasonable grounds for believing that the value of his taxable supplies in the period of thirty days then beginning will exceed £25,400.

(2) Where a business carried on by a taxable person is transferred to another person as a going concern and the transferee is not registered at the time of the transfer, then subject to sub-paragraphs (3) to (5) below, the transferee becomes liable to be registered at that time if—

(a) the value of his taxable supplies in the period of one year ending at the time of the transfer has exceeded £25,400; or
(b) there are reasonable grounds for believing that the value of his taxable supplies in the period of thirty days beginning at the time of the transfer will exceed £25,400.

(3) A person does not become liable to be registered by virtue of sub-paragraph (1)(a) or (2)(a) above if the Commissioners are satisfied that the value of his taxable supplies in the period of one year beginning at the time at which, apart from this sub-paragraph, he would become liable to be registered will not exceed £24,400."

(3) In paragraph 1(4) of Schedule 1 after "(1)(a)" there shall be inserted "or (2)(a)".

(4) In paragraph 1(5) of Schedule 1 after "sub-paragraph (1)" there shall be inserted "or (2)".

(5) In paragraph 1(6) of Schedule 1 after "sub-paragraph (1)" there shall be inserted "or (2)".

(6) For paragraphs 3 and 4 of Schedule 1 there shall be substituted—

"3.—(1) A person who becomes liable to be registered by virtue of paragraph 1(1)(a) above shall notify the Commissioners of the liability within thirty days of the end of the relevant month.

(2) The Commissioners shall register any such person (whether or not he so notifies them) with effect from the end of the month following the relevant month or from such earlier date as may be agreed between them and him.

(3) In this paragraph "the relevant month", in relation to a person who becomes liable to be registered, means the month at the end of which he becomes liable to be registered.

4.—(1) A person who becomes liable to be registered by virtue of paragraph 1(1)(b) above shall notify the Commissioners of the liability before the end of the period by reference to which the liability arises.

(2) The Commissioners shall register any such person (whether or not he so notifies them) with effect from the beginning of the period by reference to which the liability arises.

4A.—(1) A person who becomes liable to be registered by virtue of paragraph 1(2) above shall notify the Commissioners of the liability within thirty days of the time when the business is transferred.

(2) The Commissioners shall register any such person (whether or not he so notifies them) with effect from the time when the business is transferred.

4B. Where a person becomes liable to be registered by virtue of paragraph 1(1)(a) above and by virtue of paragraph

1(1)(b) or 1(2) above at the same time, the Commissioners shall register him in accordance with paragraph 4(2) or 4A(2) above, as the case may be, rather than paragraph 3(2) above."

(7) Section 33(1A) (registration of transfereee of business) shall cease to have effect.

(8) In consequence of the amendment of paragraph 1, in section 28(1) (registration of local authorities) for "1(a)(ii)" there shall be substituted "1(1)(a)".

(9). Paragraphs (2) to (5) and (8) above shall come into force on 21 March 1990.

(10) Paragraphs (6) and (7) above apply in relation to persons who become liable to be registered after 20 March 1990.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

11. VALUE ADDED TAX (SUPPLIES TO GROUPS)

Resolved,
That, in relation to transfers of assets made on or after 1st April 1990, section 29A of the Value Added Tax Act 1983 shall have effect with the following amendments—

(1) In subsection (1) for "and (3)" there shall be substituted "to (3A)".
(2) The following subsection shall be inserted after subsection (3)—

"(3A) Subsection (4) below shall not apply to the extent that the chargeable assets consist of capital items in respect of which regulations made under section 15(3) and

(4) above, and in force when the assets are transferred, provide for adjustment to the deduction of input tax."

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

12. VALUE ADDED TAX (DOMESTIC ACCOMMODATION)

Resolved,
That provision may be made about the definition of "input tax" in relation to goods or services used or to be used in connection with the provision by a company of accommodation used or to be used for domestic purposes by a director of the company or a person connected with a director of the company.

13. VALUE ADDED TAX (GOODS SHIPPED AS STORES)

Resolved,
That provision may be made restricting section 16(6) of the Value Added Tax Act 1983.

14. INCOME TAX (CHARGE AND RATES FOR 1990–91)

Resolved,
That income tax shall be charged for the year 1990–91, and—

(a) the basic rate shall be 25 per cent.;
(b) the basic rate limit shall be £20,700;
(c) the higher rate shall be 40 per cent..; and
(d) section 1(4) of the Income and Corporation Taxes Act 1988 (indexation) shall not apply.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

15. INCOME TAX (OPERATIVE DATE OF INDEXATION FOR PAYE)

Resolved,
That in sections 1(5) and 257C(2) of the Income and Corporation Taxes Act 1988, for the words from "between"


to the end there shall be substituted the words "during the period beginning with 6th April and ending with 17th May in the year of assessment.
And it hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

16. RELIEF FOR BLIND PERSONS

Resolved,
That—
(1) In section 265(1) of the Income and Corporation Taxes Act 1988, for "£540" there shall be substituted "£1,080
(2) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of that Act (pay as you earn) before 18th May 1990.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

17. RELIEF FOR INTEREST (LIMIT FOR 1990–91)

Resolved,
That, for the year 1990–91, the qualifying maximum defined in section 367(5) of the Income and Corporation Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.

PART 1


TABLES OF FLAT RATE CASH EQUIVALENTS


TABLE A


Cars with an original market value up to £19,250 and having a cylinder capacity


Cylinder capacity of car in cubic centimetres
Age of car at end of relevant year of assessment



Under 4 years
4 years or more


1400 or less
£1,700
£1,150


More than 1400 but not more than 2000
£2,200
£1,500


More than 2000
£3,550
£2,350

TABLE B


Cars with an original market value up to £19,250 and not having a cylinder capacity


Original market value of car
Age of car at end of relevant year of assessment



Under 4 years
4 years or more


Less than £6,000
£1,700
£1,150


£6,000 or more but less than £8,500
£2,200
£1,500


£8,500 or more but not more than £19,250
£3,550
£2,350

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—

18. CORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1990)

Resolved,
That corporation tax shall be charged for the financial year 1990 at the rate of 35 per cent.—

19. CORPORATION TAX (SMALL COMPANIES)

Resolved,
That for the financial year 1990—

(a) the small companies' rate shall be 25 per cent., and
(b) the fraction mentioned in section 13(2) of the Income and Corporation Taxes Act 1988 shall be one-fortieth.—

20. BENEFITS IN KIND (CARS)

Resolved,
That—
(1) For the year 1990–91 and subsequent years of assessment, Schedule 6 to the Income and Corporation Taxes Act 1988 (taxation of directors and others in respect of cars) shall have effect with the substitution of Part I (tables of flat rate cash equivalents) of the following—

TABLE C


Cars with an original market value of more than £19,250


Original market value of car
Age of car at end of relevant year of assessment



Under 4 years
4 years or more


More than £19,250 but not more than £29,000
£4,600
£3,100


More than £29,000
£7,400
£4,900

(2) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of the Income and Corporation Taxes Act 1988 (pay as you earn) before 18th May 1990.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

21. CHARITIES

Resolved,
That, for the year 1990–91 and subsequent years of assessment, section 202(7) of the Income and Corporation Taxes Act 1988 (which limits to £480 the payroll deductions attracting relief) shall have effect with the substitution of "£600" for "£480".
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

22. EMPLOYEE SHARE OWNERSHIP TRUSTS

Resolved,
That provision may be made in relation to—

(a) assets acquired with consideration provided on disposals to trustees of employee share ownership trusts;
(b) property representing such assets, directly or indirectly.

23. INSURANCE COMPANIES AND FRIENDLY SOCIETIES

Resolved,
That further provision, including provision having retrospective effect, may be made about the taxation of insurance companies and friendly societies.

24. COLLECTIVE INVESTMENT SCHEMES

Resolved,
That provision may be made about collective investment schemes and investors in them.

25. SECURITIES

Resolved,
That charges to income tax, capital gains tax and corporation tax (including charges having retrospective effect) may be imposed by provisions about securities.

26. CAPITAL GAINS (OIL INDUSTRY ASSETS ETC.)

Resolved,
That provision may be made for the purpose of capital gains tax and corporation tax on chargeable gains—

(a) excluding from an election under section 96(5) of the Finance Act 1988 certain shares deriving value, directly or indirectly, from certain assets and rights associated with oil exploration or exploitation; and
(b) limiting or extinguishing the amount of the losses on certain disposals of, or of interests in, such shares and other assets associated with the oil industry.

27. CORPORATION TAX (EFFECT OF REPAYMENT OF PETROLEUM REVENUE TAX)

Resolved,
That provision may be made with respect to the effect of a repayment of petroleum revenue tax on the computation of a company's income from oil extraction activities or oil rights.

28. DUAL RESIDENT COMPANIES

Resolved,
That provision may be made about companies resident in the United Kingdom but regarded for the purposes of double taxation arrangements as resident in a territory outside the United Kingdom.—

29. EUROPEAN ECONOMIC INTEREST GROUPINGS

Resolved,
That provision (including provision having retrospective effect) may be made about the taxation of income and gains in the case of European Economic Interest Groupings.

30. CAPITAL GAINS (ANNUAL EXEMPT AMOUNT)

Resolved,
That provision may be made as to the operation of section 5 of the Capital Gains Tax Act 1979 for the year 1990–91.

31. DEBTS AND GUARANTEES

Resolved,
That provision may be made about debts and guarantees.

32. CAPITAL ALLOWANCES

Resolved,
That provision may be made about capital allowances.

33. ERRORS IN THE INCOME AND CORPORATION TAXES ACT 1988

Resolved,
That provision (including provision having retrospective effect) may be made correcting errors in the Income and Corporation Taxes Act 1988.

34. LOCAL AUTHORITIES

Resolved,
That provision may be made about the meaning of "local authority".

35. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)

Resolved,
That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from taxation.

PROCEDURE RESOLUTIONS

PROCEDURE (INFORMATION FOR TAX AUTHORITIES OF MEMBER STATES)

Resolved,
That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may make provision for giving effect to the Directive of the Council of the European Communities dated 19th December 1977 No. 77/799/EEC and any Directive of the Council which extends that Directive to other taxes.

PROCEDURE (LOANS BY PUBLIC WORKS LOAN COMMISSIONER)

Resolved,
That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain provision with respect to the limit by section 4 of the National Loans Act 1968 in relation to loans made by the Public Works Loan Commissioners in pursuance of section 3 of that Act.

PROCEDURE (FUTURE TAXATION)

Resolved,
That, notwithstanding anything to the contrary in the practice of the House relating to the matters which may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—


(a) provision amending the Taxes Management Act 1970;
(b) provisions amending sections 7, 10, 11, 79, 393 and 396 of the Income and Corporation Taxes Act 1988;
(c) provisions about group relief;
(d) provisions amending the Capital Allowances Act 1990; and
(e) provisions about interest on repayments of petroleum revenue tax.

FINANCE BILL [Money]

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of any Act resulting from the Finance Bill, it is expedient to authorise—

(a) the payment out of money provided by Parliament of sums payable by virtue of any provision of that Act enabling provision to be made about repayment of sums paid by way of fees and charges, and
(b) any increase in the sums payable out of or into the National Loans Fund which is attributable to any provision of that Act increasing to £55,000 million, with power to increase by order to £70,000 million, the limit imposed by section 4 of the National Loans Act 1968 in relation to loans made by the Public Works Loan Commissioners in pursuance of section 3.

Ordered,
That a Bill be brought in upon the foregoing resolutions: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Secretary Waddington, Mr. Secretary Ridley, Mr. Secretary Parkinson, Mr. Secretary Wakeham, Mr. Secretary Newton, Mr. Secretary Patten, Mr. Norman Lamont, Mr. Secretary Howard, Mr. Peter Lilley and Mr. Richard Ryder do prepare and bring it in.

FINANCE BILL

Mr. Peter Lilley accordingly presented a Bill to grant certain duties, to alter other duties, to amend the law relating to the national debt and the public revenue, and to make further provision in connection with finance: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 109.]

Community Charge

Mr. Bryan Gould: I beg to move,
That the Personal Community Charge (Relief) (England) Regulations 1990 (S.I., 1990, No. 2) dated 2nd January 1990, a copy of which was laid before this House on 5th January, be revoked.

Mr. Speaker: With this, it will be convenient to consider the following two motions:
That an humble Address be presented to Her Majesty, praying that the Personal Community Charge (Relief) (England) (Amendment) Regulations 1990 (S.I., 1990, No. 402), dated 2nd March 1990, a copy of which was laid before this House on 5th March, be annulled.
That an humble Address be presented to Her Majesty, praying that the Personal Community Charge (Relief) (Wales) Regulations 1990 (S.I., 1990, No. 288) dated 16th February 1990, a copy of which was laid before this House on 19th February, be annulled.

Mr. Gould: At times, it is hard not to feel sorry for the Secretary of State and his Ministers as they wrestle with their poll tax inheritance, but sympathy for them must be strictly limited when we consider the plight of those millions of people who deserve it much more—[Interruption.]

Mr. Speaker: Order. Would hon. Members who are not remaining for the debate please leave quietly, particularly those beyond the Bar?

Mr. Gould: Our sympathy for the Secretary of State, who I am sorry does not appear to be present, must be strictly limited when we consider the plight of millions of people who will pay the price for his convolutions and incompetence and for the iniquitous scheme that he and the Government are imposing on them. I am delighted to see that the Secretary of State is now present, although I am sorry that he will not be opening the debate for the Government.
The saga of the poll tax has been increasingly marked by a desperate search for expedients and bolt holes and by increasingly implausible resort to inventions and fictions to try to mask and to conceal what has been done. We are dealing tonight with a prime example of that.
Viewed in retrospect, perhaps one of the most poignant moments in the development of the poll tax was in October, at the Tory party conference, when the Minister for Local Government and Inner Cities announced the introduction of the transitional relief scheme, under which, he assured Tory Members and councillors, no one would pay more than £3 above their rates bill. As alarm and anxiety had been expressed by Tory Members and councillors, they were mightily relieved by that assurance. They allowed themselves—they deserve no criticism for this—to be lulled into a false sense of security. Their fears were allayed; they were bought off by that assurance.

The Minister for Local Government and Inner Cities (Mr. David Hunt): It would be helpful if the hon. Gentleman would quote the exact words that I used and the exact words used by my noble Friend Lord Hesketh on the same day, when he made it clear that the pledge about people paying no more than £3 above their rates would apply only if the council concerned spent in accordance with Government spending guidelines.

Mr. Gould: I shall come to the point raised by the Minister. If he is already conceding that the promise which he appeared to give was vitiated by the false assumption which he made, that is exactly the point that Opposition Members, and many Conservative Members, will wish to press.

Mr. Jeff Rooker: I wish to kill this point straight way. Two weeks ago on our television screens we all saw the briefed and educated Tory candidate for Mid-Staffordshire tell people that their poll tax would not be more than £3 a week more than their rates. He gave that impression because that was the impression that everyone else was supposed to get.

Mr. Gould: It is for the Minister for Local Government and Inner Cities to explain himself to the House when he addresses us.
Like so much else in the poll tax saga, and so many of the measures designed to smooth off the rough edges, the relief scheme has turned out to be a massive and fraudulent disappointment. The scheme excludes many of those who might otherwise have been expected to benefit, arid offers only an illusion of help to many others. Even for those who, in principle, fall within it, many will pay much more than £3 per week extra, but will not qualify, and many others will qualify for transitional relief but will end up paying more than the £3 per week extra.
We are entitled to ask how a Government promise, so solemnly made to their own supporters, was so comprehensively broken so soon. The answer lies first in the scheme's structure. Many people are, by the scheme's rules, excluded from it. Like the transitional relief scheme for the uniform business rate, many people whose circumstances change after the scheme's introduction will lose its benefit.
That is true for those who turn 18 after 1 April 1990. It is true of those who cease to be exempt, for whatever reason—for example, those who hitherto have been mentally ill, but then recover and rejoin the community after 1 April 1990. They will not be entitled to the scheme's benefits. Those who move house and change their address, even within the same local authority district, after 1 April 1990—of whom there will be many in the ensuing three years—will not qualify. Those who fail to qualify in the first year will be disqualified in successive years, even if their poll tax bill goes us sharply in those successive years.

Mr. A. J. Beith: Is the hon. Gentleman aware that, on the advice of the Department of the Environment to local authorities, one group of people wholly excluded from transitional relief will be pensioners living in sheltered housing schemes, such as those provided by Anchor Housing? As their rates were paid by the housing association, and by them to the housing association, they will not be classed as ratepayers and the Department is advising local authorities not to pay relief.

Mr. Gould: What the hon. Gentleman said about that case is more generally true, but for slightly different reasons, for many of those living in buildings in multiple occupation.
The scheme's structure also makes it unlikely that two further and large classes of people will benefit to any great degree. Single poll tax payers living by themselves are virtually certain not to qualify, because to do so they would have had to have a rates bill in the current financial


year £156 lower than the assumed poll tax bill they will shortly receive. That is a virtually impossible requirement in most local authority districts. It would require a ridiculously low rates bill for the current year.
For example, in Pendle, it would require a rates bill of £16 or less, in York, one of just £30 or less, in Hyndburn, just £25 or less. Another way of putting the same rather implausible point is that, in Leominster, the notional poll tax would have to rise by 1,770 per cent. above the rates bill before anyone would qualify for transitional relief.
For different reasons—I refer here to a point related to that made by the hon. Member for Berwick-upon-Tweed (Mr. Beith) a moment ago—poll tax payers in large families or in buildings in multiple occupation are unlikely to gain much, if any, benefit from the scheme because the scheme is calculated on the basis of a notional poll tax paid by two members of a household only. However, the relief that they may or may not be entitled to is divided among the number of householders, and that may be three, four, five, six or more.
For all those reasons, the scheme is not what it seems. Like the uniform business rate transitional relief scheme, and perhaps even more like the relief offered to those claiming rebates but hitherto disqualified because of the savings limit, the measures taken by the Government have promised much more than they have delivered.
However, we have not yet considered the main reason why so many expectations have been disappointed. The reason why the scheme so signally fails in its stated purpose is that it is based on a fairy tale. It is vitiated by the same deliberate error that underlay the Government's ill-fated attempt to pursuade local government and the British people that somehow or other their poll tax bills were going to average just £278. Transitional relief is based on the amount by which rates bills plus £156 fall short of what is quaintly called an "assumed" poll tax. That is not the actual poll tax bill that will fall through letter boxes in a week or so's time; it is an assumed poll tax.
What is the assumed poll tax? I received a letter this morning from the right hon. Member for Mole Valley (Mr. Baker), the chairman of the Tory party, in which he addressed that question. I do not know whether he meant to describe the assumed charge in exactly these terms, but he certainly gave the game away. He wrote that the assumed charge
is an assumption, not a prediction or guarantee.
Many millions of people who might have hoped to qualify for transitional relief will now know that he spoke the truth—on that occasion, at any rate. The reality is that the assumed poll tax bears virtually no relationship to the size of the actual poll tax bill. We know why that assumption is wrong.

Mr. Hunt: Perhaps I might assist the hon. Gentleman. Barking and Dagenham council is in his constituency. He just said that the assumed charge bears no relationship to the actual charge. In Barking and Dagenham the assumed charge is £278, and the actual charge is £280.

Mr. Gould: I am delighted to congratulate my authority on its ability to meet the Government's prediction. However, that is not the case for the vast majority of local authorities, and the reason for that is understood by Conservative Members as well as by everyone else.
The Government underestimated, and assumed a level of local government spending £1·6 billion lower than the actual level for the current year. They then assumed that no new commitments would be undertaken by local authorities, including new commitments imposed on them by the Government, such as the costs of collecting the poll tax. They also assumed that 100 per cent. of the poll tax would be collected. Not one Conservative Member can tell me that that is the assumption on which his or her district or borough treasurer is operating. The most ludicrous assumption of all is that inflation is running at 3·8 per cent. Again, I ask any hon. Member to tell me whether that is an accurate forecast or assumption.

Mrs. Edwina Currie: Is the hon. Gentleman aware that, in the Suth Derbyshire district, which covers most of my constituency, the assumed charge offered by the Government is £301, which is a 13 per cent. increase over the average rates charged in the area in the previous year? The South Derbyshire district has increased its budget by 9·9 per cent. The reason why our local community charge is 45 per cent. above that figure is the free-spending idiots in Derbyshire county council.

Mr. Gould: I had hoped for a moment, as the hon. Lady rose in her place, that she was about to draw my attention to a little local miracle in South Derbyshire—that she was going to tell me that, in her constituency and in her local authority district, somehow or another, exempt from the inflation rate that applies throughout the rest of the country, inflation was only 3·8 per cent. I noticed that she somehow forbore making that claim.

Mr. Richard Tracey: Will the hon. Gentleman give way?

Mr. Gould: Here is an hon. Member who is going to make such a claim.

Mr. Tracey: May I bring the hon. Gentleman's attention back to Barking and Dagenham? The leader of the hon. Gentleman's council was quoted in the newspapers as saying that he had no complaints about the grant that he had received from the Government, and that his community charge was arrived at by good management, which had been going on for a number of years. Perhaps the hon. Gentleman would like to confirm or deny that quote. If he confirms it, will he tell us why other Labour councils cannot achieve the same level of efficiency?

Mr. Gould: Perhaps the hon. Gentleman could tell us why so few Tory council leaders have been able to make a similar claim. The reason is that, in their local authority districts, inflation is running at 7·5 per cent., which is twice the Government's assumption. That is why there is no relation between the assumed poll tax and the real poll tax. That is why, according to the Chartered Institute of Public Finance and Accountancy surveys, the average poll tax bill is 34 per cent. above the Government's projections. That is why Conservative local authorities throughout England and Wales have set their poll tax bills 31 per cent. higher than the Government said they would. That is why the average poll tax bill is £90 greater than the Government's assumed poll tax bill.
It is on that £90 average that no relief whatsoever is available under the transitional relief scheme. Because that £90 average conceals gaps which, in some cases, are much


greater and which in theory could be unlimited, the Government have so signally failed to keep their promise. That is why so many people will now be required to pay more than the £3 a week extra that they were told was their maximum increase. That is why people are not protected in the way that the Government have promised. That is why the transitional relief scheme is so fatally flawed.
The scheme has at its heart a myth that the Government hope to get away with, but that myth has now been fully exposed. As my right hon. Friend the Leader of the Opposition said last week, nothing can remedy the basic unfairness of the poll tax, but, when a Government make promises—not least to their own supporters—we, and I hope they, are entitled to see that those promises are kept.
If Conservative Members are serious, if they are honestly trying to mitigate the worst effects of the poll tax, and if they want to be able to say to their constituents that they have done their best by them, they should not accept the shamefully broken promise. They can vote the regulations down. If we vote the regulations down, the consequence will be that the Government will have to take the regulations away and come back with a better scheme that would be a more accurate attempt to fulfil the promise that they have made.
We want to see whether Conservative Members will join us in insisting that the Government keep their promises.

Mr. Barry Porter: rose—

Mr. Gould: No, I shall not give way as I am about to conclude.
If Conservative Members do not take that action, it is they, as well as their constituents, who will have been revealed as the victims of a cruel poll tax hoax.

The Minister for Local Government and Inner Cities (Mr. David Hunt): The hon. Member for Dagenham (Mr. Gould) made an unworthy speech. If he had wanted credibility in the House, he should not only have quoted the promise that he alleged that I made, in the terms incorrectly advanced by him; he should also have quoted and referred to Hansard for the other place, because the details of the scheme were carefully set out by my noble Friend Lord Hesketh on 11 October 1989.

Mr. John Battle: Will the Minister confirm that he mentioned the figure of £3?

Mr. Hunt: Yes.
When my right hon. Friend the Secretary of State for the Environment and I took over the responsibility of local government in the Department of the Environment eight months ago, we found that there was no scheme to protect ratepayers from the consequences of the change to a new system. We felt that circumstances suggested that such a scheme should be introduced. We also found that a safety net would last for four years and decided that we should give our right hon. and hon. Friends an indication that the period for contributions to the safety net would last for only one year. In the first year, half the gains would flow through, and in the second year the full gains would flow through.
We decided that rather than abolish the first year of the contributions to the safety net, we would use the money to bring in a transitional relief scheme. At that time, we

quoted figures of just over £600 million for a transitional relief scheme that would last for three years. We chose our words extremely carefully, which is more than the hon. Member for Dagenham has just done. We said that we would introduce a transitional relief scheme that would protect ratepayers from the consequences of the changes in such a way that, provided the council spent in accordance with the assumptions made by the Government, ratepayers would not be more than £3 per week worse off.

Mr. Gould: When the hon. Gentleman expressed himself in those terms, did he have any inkling that in almost every case the assumed poll tax figure would fall so far short of the real poll tax figure? If, as I expect, he had no such inkling, how did he expect those who were listening to him to realise that the promise that he was apparently giving them was conditional on an assumed figure turning out to be right?

Mr. Hunt: If the hon. Gentleman refers to the statement made in the House of Lords on that day and to the speeches made subsequently, he will see that it was made absolutely clear at all stages that the assumed charge would be based—[Interruption.] No, let me answer the hon. Gentleman—that the assumed charge would be based on the precept levied by the council from the ratepayer, plus grants from the Government and the business rate, increased by 4·64 per cent. Those figures were published in full on 6 November. The hon. Member for Leeds, West (Mr. Battle) is nodding his head. Those figures were known on 6 November, and were published on 11 January—

Mr. Battle: They were different.

Mr. Hunt: Only in respect of the adjustments made as a result of the grant settlement consultation. If the hon. Gentleman looks at the differences, he will see that they were minimal.
We also met the local authority associations, almost immediately after the announcement of the transitional relief scheme was made. We explained to them the basis on which the Government figures were to be assumed, and the fact that external finance for local authorities would be increased in the coming financial year over this financial year by 8·5 per cent. and that the total amount of standard spending assessment would be increased by 11 per cent. We said that, in those circumstances, we hoped that local authorities would reach community charges in accordance with the level of spending that increased by an amount within the rate of inflation. As it so happens, local authorities have decided to increase their spending by much more than the rate of inflation. Because the level of the community charge depends very much on the local spending decisions of each council, that has immediately increased the community charge.
When I announced the scheme at the party conference, and my noble Friend Lord Hesketh announced it in the other place, we estimated that the total cost of it would be, in the first year, £300 million, that the total amount would be £600 million over three years, and that in the first year 6 million people would benefit. These are important figures which show that we have not gone back on any promise that we have made—the accusation that has been levelled.
We have since revised the figures, and, based on the same commitment, we now find that it will cost not £300 million but £350 million in the coming year, that not just


6 million but 7·5 million people will benefit, and that the total cost of the scheme will not be £600 million but, over three years, £810 million.

Mr. Andrew Rowe: Would it not have been a great help to my hon. Friend if more councils had copied the example of Rochester upon Medway, which has set a community charge of £248, which would have been even less if we had not had to make arrangements to bail out councils elsewhere by contributing to the safety net?

Mr. Hunt: That is a helpful comment because it enables me to point out something on which the Labour party has sought to mislead the public—this is a serious accusation. This misleading statement has been picked up, quite incorrectly, by many in the media. It was made by the hon. Member for Sheffield, Brightside (Mr. Blunkett), who said that those in overspending council areas would lose their right to transitional relief. That is untrue. It is important to say this because that statement has been repeated several times by Opposition Members. Once the transitional relief figure has been fixed, in accordance with the assumed figures, not one penny or pound of it is lost, even if the recipient of that relief is in the area of an overspending Labour council.

Mr. Gould: The point that my hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) made was that there would be no relief for the gap between the assumed figure and the real figure. If the Minister will look at column 750 of Hansard for 6 November, he will see the record set out clearly. Unlike the wriggling to which the right hon. Gentleman treated us when he gave his assumptions about the level of poll tax charges, he purported to give us specific figures about the cost of the transitional relief scheme and the numbers who would benefit. Does he agree with paragraph 2 of the report from the working party on the community charge, from his own Department? It says that the figures that he has quoted and the figures on which he bases his argument are "indicative" rather than "precise forecasts".

Mr. Hunt: It is an indicative forecast of how much the relief will cost in the first year and how many people will receive it. I have upgraded the figures from £300 million to £350 million and the receivers from 6 million to 7·5 million. I stand by those figures.

Dr. Keith Hampson: I am sure that my hon. Friend will agree that there is much uncertainty and anxiety. Will he upgrade the assumed community charge, which in Leeds was £257, to the assumed target average of £278? That is one of the reasons for a sense of injustice. Will he consider extending the period of transitional relief so that the unwinding of it in conjunction with the unwinding of the safety net does not produce substantial losses in northern town after northern town?

Mr. Hunt: The assumed level of spending is based on last year's spending plus 4·64 per cent. That applies throughout the country, and it does not bear a direct relationship to what my hon. Friend was talking about when he referred to the standard assessment. It is designed purely to cover the consequences to a ratepayer for a

change in the system and not to cover changes in the spending pattern of his local authority. That is key, and that was the basis on which the scheme was announced.
I must take issue with the hon. Member for Dagenham. I cannot recall being accused—perhaps the hon. Gentleman has levelled this accusation at others—of misleading the House. Let there be no misunderstanding about this: what the Labour party has said about transitional relief is entirely untrue and has led to much uncertainty in the country. There are many who believe that they will not be entitled to transitional relief because of statements made by Opposition Members when they will be entitled to it.

Mr. Tony Marlow: We are grateful to my hon. Friend for the relief that has been made available, but there are many hundreds of thousands, if not millions, of people who are faced with considerably higher bills than they had last year. Some of them are relatively low paid, yet they are faced with increases of up to £8 a week. Many pensioners are still concerned about the rate of attrition of their savings. Can my hon. Friend tell the House—many of his hon. Friends are deeply anxious—that the Government will be introducing further support and relief this year for those who are most hard pressed?

Mr. Hunt: We are debating a transitional relief scheme which, despite the accusations of the Opposition, has not been changed one jot from the moment when we announced it, although its scope has increased. My hon. Friend has drawn attention to a serious circumstance in which local people are facing the consequences of their local councils deciding to increase their spending by substantially more than the rate of inflation. I can offer no immediate sustenance by means of the scheme to deal with that. The level of the community charge depends much on the spending decisions of a local authority. The scheme provides transitional relief at a cost of £350 million in the first year to 7·5 million people to cover the changes in the system. It is nothing to do with the change in the system that there have been spending decisions that would mean an increase in rates of 33 per cent. That is nothing to do with the change in the system. It has everything to do, however, with the way in which spending decisions have been made.

Mr. Stuart Bell: I ask a question as a naive constituency Member without an understanding of the variety of figures which have been quoted. I have a letter from one of my constituents, Amanda Dawn Singleton, who has received a document which tells her that she will have to pay £42·90 a month on the introduction of the community charge. She receives £44 and a £10 training allowance per week. She writes:
I cannot afford to pay this amount. I am in a desperate situation, could you please please help me.
I have her community charge bill with me. It states:
Less your Government transitional relief 0·00
Less your Government rebate 0·00
What can I say to my constituent?

Mr. Hunt: I always dislike trying to deal with complicated cases across the Floor of the House. I do not know the particular circumstances. If the hon. Gentleman wishes to put those facts to me, I shall consider them. Transitional relief is intended to benefit those who are currently ratepayers or members of ratepaying couples


and we have singled out pensioners and disabled people who do not fall into that category and given them special relief, which means that they will pay a community charge of £158 in the hon. Gentleman's area and £156 in Wirral.

Mr. Keith Speed: Does my hon. Friend agree that the burden of the Opposition's case is that they endorse local government expenditure increases of 35 per cent. and expect the taxpayer to underwrite them?

Dame Elaine Kellett-Bowman: Does my hon. Friend agree that it would be—

Madam Deputy Speaker (Miss Betty Boothroyd): Order. I ask the Minister to respond to each intervention. We cannot have one on top of another—[Interruption.] I should like a little less noise from the Benches below the Gangway.

Mr. Hunt: My hon. Friend the Member for Ashford (Mr. Speed) is absolutely right. The transitional relief scheme covers and protects ratepayers and members of ratepaying couples from changes in the system. My hon. Friend has clearly demonstrated that what is now arising is the result not of the change in the system but of spending decisions that would have meant a 33 per cent. increase in domestic rates.

Dame Elaine Kellett-Bowman: Am I right in believing that in my hon. Friend's constituency ratepayers had a choice between the lower Conservative community charge and that suggested by the Liberals, which was higher? Would it not have been an enormous advantage to the citizens of Lancashire if they could have chosen between the additional £123 million of expenditure by the Labour party and the reduction of £60 million by the Conservative party?

Mr. Hunt: I could not agree more with my hon. Friend. In Wirral the Conservatives proposed a community charge, and so did the Liberal-Democrats, but the Labour party refused to put forward a figure—

Mr. Gould: rose—

Mr. Hunt: Wait a moment; let me answer my hon. Friend. The Labour party decided not to propose a charge, although it is believed that if it had it would have been about £450. Some 12,500 people voted in the telephone poll—64 per cent. opted for the Conservative suggestion.

Mr. Den Dover: I listened carefully to my hon. Friend's speech at Blackpool. It was my opinion—shared, I am sure, by the many thousands present—that each individual in a married couple would benefit to the tune of £3 a week. Many of my constituents now think that there has been an act of bad faith. They are now told that it is £3 a week maximum—assuming that the spending levels are adhered to—shared between two or more people. Can my hon. Friend assure us that that was never the intention? My constituents are very concerned about this matter.

Mr. Hunt: I said clearly at the party conference that, with the proviso I made about spending by local authorities, the new scheme would ensure that in areas where local authorities spent sensibly no ratepayer or ratepaying couple would be more than £3 a week worse off when the community charge was introduced, whatever

their income. I can add that we shall now single out pensioners and the disabled for special treatment, whether or not they pay rates.
If the local authority decides to spend above Government guidelines, it is right that the full amount of the excess
—these are my exact words at the party conference—
should fall to be met by the local charge payer".

Mr. Rooker: Does the Minister appreciate that, if that statement had been made where it could have been tested by questioning—for example, in the House—the misinformation and false promises would not have been planted in people's minds? It was reading that from the conference platform that caused the difficulty. I have one general question.

Mr. Hunt: May I get this absolutely straight? The hon. Gentleman was not listening. I said that my comments at the party conference were repeated in the other place at almost exactly the same time by Lord Hesketh. It may well be that the hon. Gentleman has some criticisms of his hon. Friends in the other place, but on 11 October 1989, at column 344, Lord Hesketh—

Madam Deputy Speaker: Order. I am sure that the Minister is a sufficiently practised parliamentarian to paraphrase that for me.

Mr. Hunt: If the hon. Member for Birmingham, Perry Barr (Mr. Rooker) checks the facts, he will see that there was no misunderstanding whatever.

Mrs. Currie: May I refer my hon. Friend to the Library research note No. 477 of 3 November 1989, almost immediately after we returned to the House, in which the details that he has set out on the transitional relief, which will go to 10,000 families in my constituency, are set out precisely? The only difference since then has been that the allowance for inflation has been raised. Does my hon. Friend agree that, if Labour Members did their homework in the Library, they would not have made the mistakes that they have made tonight—unless they are doing it deliberately?

Mr. Hunt: The Labour party has done its homework, but it has chosen to ignore the facts.

Mr. Gould: rose—

Mr. Hunt: Just one second. That has caused much misunderstanding throughout the country. The circumstances of this scheme have not changed one little bit, except in one respect: whereas before we thought that the total scheme over three years would cost £600 million, it now will cost £810 million.

Mr. Gould: I am grateful to the Minister for at last giving way. [Interruption.] Before his hon. Friends attempted to rescue him, he was making an interesting point about the special relief, as he termed it, which would be available to elderly and disabled people. He will know that in the regulations relief takes the form of a limit to what they must pay of £156 plus Z, Z equalling the difference between the assumed poll tax and the real poll tax. He will accept that Z on average throughout England and Wales amounts to £90. That means that the average bill for an elderly and disabled person will be £246 a year. As we are talking about elderly and disabled people who


hitherto have paid nothing whatever, how can he describe an obligation to pay £246 as special help and transitional relief?

Mr. Hunt: It is special help under the transitional relief scheme. The individuals have full entitlement to rebate, if they fall within the guidelines.

Mr. Barry Porter: The hon. Member for Birmingham, Perry Barr (Mr. Rooker) talked about mist. There is no mist surrounding the rebates available to pensioners and the disabled in the Wirral. I am glad that my hon. Friend gave us the figures for those groups. The mist is when Labour Members talk of honesty, seriousness, promises and a better scheme. That is more than a mist; it is a complete fog. I have heard nothing. Perhaps my hon. Friend can enlighten me.

Mr. Hunt: My hon. Friend is right to emphasise yet again that transitional relief is just a part of the picture. The scheme has not changed one little bit since we announced it last October. It is in no way related to people's means. It would have been impossible for us to give a blank cheque and to say that we would cover the difference between this year's rates bill and next year's community charge whatever the level. I do not think that anyone in his right mind could have expected that. So we announced the scheme, and we have fulfilled our pledge.
My hon. Friend the Member for Wirral, South (Mr. Porter) is right to point out that there is also a rebate system, which is another part of the same picture. He is equally right to point out that in Wirral no pensioner or disabled person who is a ratepayer or a member of a ratepaying couple will be worse off by more than £156.

Miss Emma Nicholson: I am convinced that my hon. Friend means the transitional relief to effect exactly what he has said it will effect. Will he, most kindly, assure me that he will continue to consider its operation very carefully, since neither he nor I can be comfortable when, in one of the lowest-spending boroughs in England—West Devon borough—not one single person will qualify for transitional relief, and very few couples —perhaps a few thousand—will qualify. That means that three quarters of the people in West Devon borough will pay more than £3 extra a week.

Mr. Hunt: I would just say—[HON. MEMBERS: "Answer."] Give me a chance. I do not believe that there is no one in my hon. Friend's area who could claim transitional relief—[Interruption.]

Madam Deputy Speaker: Order.

Mr. Bell: On a point of order, Madam Deputy Speaker. Could you confirm that you heard, as we heard, the hon. Member for Derbyshire, South (Mrs. Currie) say earlier that 10,000 of her constituents—

Madam Deputy Speaker: Order. That is not a point of order.

Mr. Hunt: It may well be that my hon. Friend the Member for Torridge and Devon, West did not mean nobody in her area, but meant no single person in her area. That may well be the case. The whole purpose of this

scheme is to protect the ratepayer and the ratepaying couple from changes in the system. In the main, the system benefits single people.
The hon. Member for Dagenham said a few moments ago that one of the defects of the system was that it did not give relief to single people, for instance, in a borough such as Wandsworth. That was a direct quote from the press release by his hon. Friend the Member for Brightside which said, "e.g. Wandsworth". The reason why single people do not benefit—except pensioners or disabled people who do not presently pay rates or are not part of a ratepaying couple—is that the majority of them are generally better off. In Wandsworth they will pay £148 and therefore they will pay only three—[Interruption.] Wandsworth gets the second lowest amount of Government help of any inner London borough. In Wandsworth the charge is £148. As the scheme protects people against a payment of £156, that is why single people in Wandsworth do not benefit.

Mr. Dave Nellist: The Minister says that single people will be better off. Is he aware that in Coventry those under 25 who earn more than £70·85 a week do not qualify for any form of rebate and will have to use between a month and a month and a half of their wages just to pay the poll tax? According to yesterday's opinion poll in The Sunday Correspondent, 7·6 million people, including a third of all those under 34, will refuse next Monday to pay this Tory tax.

Mr. Hunt: One of the sad features of what the hon. Gentleman has just said is that he appears to show no shame for having said it. He has the privilege of being a Member of Parliament. In using that privilege, he should be aware that people listen to Members of Parliament when they say something about whether they should obey the laws of the land. By urging people throughout the country not to pay, which is what he is doing, he is putting an increased burden on the remaining people in his constituency who will have to pay for the free ride that he is seeking and that he is urging others also to seek.

Several Hon. Members: rose—

Mr. Hunt: It is about time that, instead of turning silently away from the hon. Gentleman and pretending that his words had not been spoken, the Opposition Front Bench—[Interruption.]

Madam Deputy Speaker: Order.

Mr. Hunt: It is about time that those individuals there—

Mr. Brian Wilson: Will the Minister give way?

Mr. Hunt: It is about time—

Mr. Wilson: rose—

Madam Deputy Speaker: Order. I request the hon. Member for Cunninghame, North (Mr. Wilson) to resume his seat.

Mr. Hunt: We on this side will never stop demanding that the Opposition Front Bench should condemn that sort of law breaking. It is about time that they spoke out. I commend the regulations to the House.

Mr. Jeff Rooker: I intend to make only a few points, just to give the Minister a chance to calm down.
Twice as many people will pay the poll tax as paid the rates. According to the Government, the same amount of money will be collected. People do not understand why so many people will qualify for relief. That has to be explained. It was never explained while the legislation was being considered. I remind the Minister that it was pushed through the House by a party which got only 42 per cent. of the votes at the last election and which used the guillotine. The legislation was never fully and properly discussed. We were unable therefore to consider every possible defect that was alluded to either in the other place or in this House. I suspect that many more defects have still to come to light.
The Minister discovered a few months ago that transitional relief would be needed for all the losers. How can hundreds of millions of pounds be required when only the same amount of money is to be collected from twice as many people? Ministers must explain that, outside the House.

Mr. Roger King: May I help the hon. Gentleman? As a Birmingham Member, he will know that Birmingham city council's approved budget for last year—1989–90—was £622 million. The budget for the coming year has risen to £744 million: that is why we are paying more. He will have observed, in his travels around the city, that Birmingham has not spent this year's budget. That is clear from the fact that it is repairing roads, and doing a number of other things that it should do in any case.

Mr. Rooker: As the hon. Gentleman knows, next year's increase in new money and new spend for Birmingham is £17 million—2·38 per cent.—of which £13 million is going to education and social services. We make no apology for that. The Government have manipulated the figures so that the amount can be made to look like more than £100 million, but for the purposes of the people of Birmingham who will experience any improvement in services it is £17 million. I defend that, and will continue to do so; what I do not defend are the funny-money figures that the Government have foisted on Birmingham.
I do not wish to detain the House: I want to hear Conservative Members make the explanations that they must make. However, I will give way to my hon. Friend the Member for Burnley (Mr. Pike).

Mr. Peter L. Pike: Even when viewed in the most favourable light, do not the Government's proposals mean that a married couple must be more than £6 a week worse off before they can receive a penny of transitional help? To many people, that is a tremendous amount.

Mr. Rooker: Precisely.
The Minister has said that the Labour party is to blame for giving the country false information. The last time that I looked up the figures, the Government employed 800 press and information officers; to the best of my knowledge, the Labour party employs fewer than can be counted on the fingers of one hand. How can we have managed to put all that false information around the country? It does not make sense.

Mr. Peter Hardy: My hon. Friend has mentioned false information. The Minister appeared to approve the assumption of the hon. Member for Derbyshire, South (Mrs. Currie) that 10,000 families in her constituency would receive poll tax relief. If that is the case—unless the circumstances are extremely unusual—the prediction of 7·5 million beneficiaries and a figure of £350 million is surely a gross underestimate.

Mr. Rooker: We need to look at the figures to find out how many people, on average, will benefit in each constituency, but we shall not know for certain until the bills come through the letter boxes. The real row about the poll tax has not started yet. I know that Croydon, for example, has already sent out its bills—without any rebate details—but until all the bills arrive I do not think that the country will wake up. The Government may think that there is trouble now; let them wait until next month and the month after.

Sir Rhodes Boyson: I know that many hon. Members wish to speak, so I shall be very brief.
Conservative Members are grateful for the transitional payment arrangements. The Minister has made no attempt to misrepresent the facts; he has always been not only courteous but accurate, and any disagreement between him and me has nothing to do with misrepresentation. The transitional arrangements will be helpful, but they do not go far enough. That is the problem. I consider that four categories require help.
First, it is wrong to take away the safety net in the second, third and fourth years and not the first year. In the first year, the built-in safety net will be at great cost to many careful Conservative boroughs where up to £70 per person is being transferred to what they consider to be spendthrift Labour boroughs. That will stick in the gullets of people there.
The second category was also affected by last week's Budget—a husband has to pay his wife's poll tax if she is at home. At the same time as the Government have separated taxation between the husband and wife, they have brought it back in the poll tax. That will cause great resentment in the country. If a wife stays at home to look after her children, her husband will have to pay her poll tax although they are taxed separately.
The third category is pensioners. If pensioners live in their own homes or with their relatives, they have to pay the poll tax, or their families have to pay it for them. If they live in residential homes, they do not have to pay the poll tax. That is another anti-family measure that was introduced, not without thought, but without considering the possible reactions to it, and some help should be provided.

Mr. Beith: Will the right hon. Gentleman give way?

Sir Rhodes Boyson: I shall not give way, as I know that other hon. Members wish to speak.
My fourth and final point is that I quite understand why my hon. Friend the Minister said that, if an authority spends more than what the Government intend, the charge payers in that area will have to pick up the bill. But that is hard luck on Conservative voters in Conservative areas swamped within Labour boroughs. They have voted Conservative all their lives, as in Brent where 19 out of 21 councillors are Conservatives. We cannot get many more


than that. We have tried to get 23, but so far we have not achieved it. I have some sympathy with those Conservative voters in such areas, because they are doing all they can, yet they are penalised without any transitional help.
I make only those four points, as I know that other hon. Members wish to speak.

Mr. Ronnie Fearn: I shall be factual, but not too brief.
I begin with a quotation:
If your actual community charge bill is more than the assumed community charge bill the relief will be calculated on the basis of the assumed charge.
That is a quotation from the Department of the Environment press release of 7 March when it announced that 7·5 million people, rather than 6 million people, will get transitional relief.
The press release highlights so well the Government's inability to estimate or forecast anything correctly. It is worrying that the entire poll tax system is based on estimates and assumptions. It is quite clear that the Government have got their assessments totally wrong and it is not surprising that the country is now in uproar.
It was not long ago that the Government, desperate to sell the poll tax system to the electorate, were suggesting that no one would have to pay an increase of more than £3 a week. It is abundantly clear that that figure is no more than fiction, as are most of the other figures that we have heard tonight.
The Government have hugely underestimated the cost of vital services. That is probably due to their ignorance of the needs of local people, the elderly, children in state schools and those less able than themselves to participate fully in our communities and to their ignorance of the recreation needs of children and adults in small and large communities.
The Department of the Environment's statement in the press release that I quoted is without explanation or apology and does not spell out that more than 90 per cent. of local authorities are setting poll tax rates well above the assumed charge. That means that the 7·5 million who are entitled to relief will not get the full amount.
This lack of clarity is reprehensible. It is clear that the Government hope to ride out the storm and that they hope that, once the system is up and running, people will get used to it and complain less. With other kinds of policies, that attitude may work, but I am afraid that it will not work with this one.
People were misinformed about this tax, and they are still being misinformed. They believed that the Government had guaranteed that increases would be no more than £3 a week, but they are finding that they have to pay far more, without any means of relief, but also without fully understanding why. On top of that, many people did not realise that in households where there are more than two people the relief will be calculated on the basis of only two persons, and the amount of relief will be shared between all the poll tax payers in that household.

Mr. David Hunt: I may not have dealt properly with that point when I responded to my hon. Friend the Member for Chorley (Mr. Dover), so I am grateful for this further opportunity.
Before making our announcement, we consulted the local authorities. They told us that if they were to come anywhere close to completion of the scheme in time—and at that time they thought that it might not be possible to complete all the administration, and so on—there would have to be an automatic allocation of relief for households with more than two people. We considered that view very carefully, and, in response to local authority pressure, we conceded the point and allowed the relief to be spread equally between all occupants. But that does not prevent the pensioner or the disabled person who has not been a ratepayer, or part of a ratepaying couple, from claiming his special relief in addition to the automatically allocated relief. I hope that that explains the position.

Mr. Fearn: I am very grateful for the Minister's explanation. The point was not explained fully in the response to the hon. Member for Chorley (Mr. Dover).

Mr. Beith: The Minister still has not explained why this relief is not available to pensioners living in sheltered housing, whose rates were paid through housing schemes. They are not allowed to qualify for the special relief, because they previously contributed to the rates through their payments to the housing association.

Mr. Fearn: I thank my hon. Friend for his intervention. So far, the Minister has nodded twice to that question. No doubt he will have an answer later.
I want to refer now to the problems of young people on low incomes. Often these people come from low-earning families. They are less likely to be able to move out of their homes or to do what their better-off neighbours do. The number of such people is increasing as Government policy impairs moves by young persons to become independent by finding their own homes. These people are to be penalised even further. They are not being treated as deserving of full participation in the transitional relief scheme. They are, however, seen as being deserving when it comes to paying the poll tax. They are not entitled to a rebate—they will pay in full. A young person earning less than £3,750 per year will have to pay as much as 11 or 12 per cent. of net income.
As I said earlier, the whole poll tax system is based on assessment and assumption, which is bound to create anomalies. But of even more concern to local authorities is that, for many counties, the notional expenditure level to be used in the calculation of transitional relief is significantly below the standard spending assessment. The Association of County Councils requests that, for the purposes of calculating transitional relief, the 1990–91 community charge calculation be based on the higher of the notional spending level and the standard spending assessment.
It would be even better if the Government were to take this opportunity to increase their benchmark figure of £278 for standard spending, which was calculated and set many months ago—before there was any concrete evidence of the real spending levels of local councils for 1990. I note that the Government have promised £21 million to cover the cost of administration. I believe that, so long as the full amount is distributed in such a way that the councils get the benefit and that part of it is not clawed back into the Treasury, local authorities will consider the amount to be reasonable. But I wonder whether the Minister has any idea of the sheer weight and physical effort that will go into the administration of the poll tax scheme. The massive


volume of paperwork, claims and rebates will lead to long delays, and that will result in hardship for many of those least able to manage.
Already, 40,000 people have applied to Sefton council's finance department for rebate forms, 10,000 have applied to the social services department, 20,000 to the housing department and a further 5,000 to the Department of Social Security. So far, a total of 75,000 applications have been made. Since Budget day and the doubling of the limit on savings, there has been a further deluge.

Mr. Donald Thompson: Is that more or fewer applications than for housing benefit?

Mr. Fearn: More.
Sefton council received 3,500 Government-sponsored newspaper coupons, which proved to be almost useless because they made no distinction between rented and owner-occupied accommodation. Those coupons have been returned for people to explain the information that they put on them. That is a further example of ratepayers' money being wasted. I find it hard to comprehend, given those figures for a not unusual local area, that the Government could possibly have accounted for all administration costs. I am certain that they have not considered the hardships of many people, who will suffer from the inevitable delay in the production of forms.
The poll tax is unfair, unworkable and expensive to run. The poll tax, not the statutory instruments that we are discussing, should be revoked.

Mr. Robert G. Hughes: When the debate began, the hon. Member for Dagenham (Mr. Gould) sought to suggest that the transitional relief announced by my hon. Friend the Minister for Local Government and Inner Cities at the Conservative party conference was different from the scheme now before us. As he sought to explain his remarks, and after the reply from the Minister, it became abundantly clear that the comments of the hon. Member for Dagenham were in line with most comments that we have heard from Labour Members: they simply were not based on facts. Labour Members were trying once again to mislead the public that the scheme is other than what it is. It is disgraceful for them to pretend that people are being denied relief when it was never offered.
Is it reasonable that the transitional relief scheme should be available for use by any Labour council that wants to set an excessive community charge, irrespective of the needs of the borough? I say that for a particular reason. Despite the humbug that we have heard from Labour Members, we have never heard, in this debate or in others on the rating system, any suggestion that transitional relief would be available for people who have suffered enormous rates increases at the hands of Labour councils. What about Labour councils that year after year caused misery to thousands of people by increasing rates in excess of inflation?

Mrs. Maria Fyfe: Will the hon. Gentleman consider the case of a pensioner couple in my constituency who before the poll tax paid £84·20 in rent and rates but this year will have to pay £91·24? Does he agree that that is £7·04 more a month, not £3? Does he expect his constituents to be equally worse off, or will this be another example of people in England being better off?

Mr. Hughes: I shall be happy to consider that matter provided that the hon. Lady will consider all those people in the London borough of Ealing who, last year, had rate increases of more than 50 per cent., all those older people who were denied money for food and heating because they had to pay excessive bills to a Labour council. It is that sort of point, coming from Labour Members, which does the Labour party no credit because Labour Members shed crocodile tears when it is they who take money from people's pockets to pay for excessive spending. I give way to my hon. Friend the Member for Ealing, North (Mr. Greenway), who can explain some of those matters.

Mr. Harry Greenway: I can explain the suffering of some of my constituents. The constituents of the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) do not know they are born. If they lived in Ealing they would suffer. In Ealing, we have had a rate—a local tax—increase of 264 per cent. in four years, when inflation was only about 20 per cent. What about that for Labour wickedness?

Mr. Hughes: My hon. Friend's intervention points up my case.

Mr. Nellist: rose—

Mr. Hughes: I shall not give way to scabs who make other people pay for their community charge.

Madam Deputy Speaker (Miss Betty Boothroyd): I am sure that the hon. Gentleman will want to withdraw that remark.

Mr. Hughes: If you, Madam Deputy Speaker, advise me that the remark is unparliamentary, of course, I withdraw it, but it is no worse than anything that anyone who is going to be—

Madam Deputy Speaker: Order. It is a most objectionable word, and I am grateful to the hon. Gentleman for his courtesy.

Mr. Hughes: What the hon. Member for Coventry, South-East (Mr. Nellist) is doing to those people who will have to pay for the services that he enjoys on his high salary simply defies description. What makes it worse is that anyone who follows his lead and does not pay the community charge will be dragged through the courts. He can sit behind his privilege as a Member of Parliament and not be dragged through the courts; he is making people do things that he will not have to do.

Mr. Nellist: rose—

Mr. Hughes: I have already told the hon. Member that I will not give way to him.
The transitional scheme is generous and will come to the aid of those people who have to pay more money as a direct result of the new scheme of local taxation. That is what it is designed to do and what the Government promised it would do. If the Labour party wants to talk about councils which charge a high community charge, it must come up with the explanation of why people have to pay more money. It is no good the Labour party criticising, when it refuses not only to come up with a scheme of its own, but to come up with the answers to any of the questions posed by Conservative Members. Labour


Members may want to act like deaf mutes, but in the end they will not get away with that, because the electorate will rumble them.

Mr. Barry Jones: The Council of Welsh Districts proposed transitional relief as a less administratively complicated system than that for England. However, since the Welsh Office revealed the final details, the Council of Welsh Districts, the architect of the transitional relief scheme, has expressed deep concern that the Welsh Office has not gone far enough, either in the period of relief—three years, not five—or in the extent of the relief.
Many Welsh communities will not receive transitional relief—541, nearly seven out of 10, will not. Only 323 will receive transitional relief. There are anomalies in the system. Due to the way that community boundaries are drawn, people living on opposite sides of the road, using the same services, may receive different levels of relief. For example, residents in part of Trehafod in the Rhondda will receive £41 relief, but their neighbours whose homes are in Taff-Ely will receive no help. Similarly in north Wales, residents in Llanfynydd in Alyn and Deeside will receive no transitional relief while their neighbours in Brymbo in Wrexham Maelor will receive £8 relief.
With regard to anomalies, the professionals in local government finance in Wales believe that the Government are less than competent in deciding what area should have relief. The anomalies set area against area and it is clear that the Government have not done their homework. The arbitrary use of areas means that thousands of people are losing.
The average community charge in Wales will be £232, which is almost £60—or one third—more than the Government's figure of £173. A comparison between the average rates bill for the current year for adults and the community charge starting next month shows that poll tax payers in Blaenau Gwent, in Cynon Valley and in Rhondda will pay more than £100 more per person once transitional relief ends.
No council in Wales—be it Labour, Conservative or independent—has levied a poll tax at the Welsh Office figure. The introduction of transitional relief smacks of panic by a Government who have recognised the enormity of the opposition to the poll tax among ordinary people and the size of electoral disaster that threatens to engulf them. The Government have dug themselves such an immense hole that they need more than transitional relief stepladders to get out of it.
If Welsh authorities are charge-capped, who will do the capping? Will that be the last act of the present Secretary of State for Wales or the first act of the present Minister for Local Government and Inner Cities? That question should be answered. Should there be charge capping, the Secretary of State should make a statement in the House. We are tired of statements of importance to Wales being made outside this place. We are tired of Government by press release.
The poll tax is unpopular in Wales. We believe that it will create more debt in the Principality. We fear that it will divide families and that young people may leave home because of the tension and debt that it will create within

homes. We regret that people looked after by carers or relatives must pay the poll tax, while those in institutional care will not. We also believe that the Government have greatly underestimated the administrative costs of this iniquitous tax. No council treasurer in Wales believes that there will be 100 per cent. collection of the poll tax.
We in Wales believe that the poll tax is unjust. It is not related in any way to ability to pay. Nobody would deny that Wales is a mature political democracy. However this despised tax is dubbed and however it is tarted up, the Welsh people will continue to believe that the poll tax is unjust and entirely unacceptable. When the poll tax demands go through letter boxes in Wales next week, the shame will be that the poorest of our people will be hit the worst. That is why the Opposition oppose what the Government propose.

The Parliamentary Under-Secretary of State for Wales (Mr. Ian Grist): It is extraordinary that the hon. Member for Alyn and Deeside (Mr. Jones) accords such importance to this subject that, at the last sitting of the Welsh Grand Committee, instead of debating this subject, we debated the effect on Wales of the Channel tunnel. That demonstrates the hon. Gentleman's depth of feeling.
I assure my right hon. and hon. Friends that we have the operation of the community charge very much in mind and we are aware of their concerns about it. We listen to what is said, and that is why we have the regulations and why they are in the shape they are. The Government will go on listening and taking note of what happens on the ground, and we will act accordingly. We could, of course, do absolutely no less. I certainly make that promise to my right hon. Friend the Member for Brent, North (Sir R. Boyson).

Mr. Dafydd Wigley: Will the Minister give way?

Mr. Grist: I shall not give way.
The regulations are designed to ease the passage from one system to another—they are not permanent crutches. Indeed, the three years over which they are to operate give local authorities, if they have any concern for their poorer citizens, time to moderate their expenditure ambitions and thus to keep their community charge at a reasonable and moderate level. Certainly, as we have seen north of the border, after the initial disgraceful burst when the new system was set up last year, local authorities have begun to moderate this year as those who pay the charge come to understand the system a little better.
What is clear is that many councillors, mainly supporters of the Opposition, enjoy spending other people's money. As my hon. Friend the Member for Harrow, West (Mr. Hughes) pointed out, their motto is "Spend, spend, spend." Of course we are still in the dark about just how Labour Members would raise the money that they are going to spend. Will it be from income tax, a roof tax, or from some sort of capital values? Will rates be revived? We never hear the answer. We always hear how to spend money, never how to raise it. It beggars belief that they should propose such expenditure; the effect on inflation and interest rates would be catastrophic.
A major purpose of the community charge is that local councils will be answerable to local electors. Electors will quickly see in their bills the results of councils' inefficiency


or empire building. The effects of local authority overspending were outlined very clearly in the earlier speech by my right hon. Friend the Chancellor of the Exchequer.
The regulations for Wales have been welcomed by Welsh local authorities and by the financial adviser to the Welsh counties, who said that they were extremely well targeted. They are clear, easily understood, and cheap to operate. [Interruption.] Hon. Members from England could not have been listening to the hon. Member for Alyn and Deeside. He accepted that the Welsh system is easily understood, and so it is. It has benefited about 750,000 people by between £1 and £93. It is based on communities, or parishes as they are called in England, and compensates all those who—

Mr. Barry Jones: Will the Minister give way?

Mr. Grist: No.
It compensates all those who, on the basis of last year's rates, uprated by the retail prices index and allocated per head, find themselves paying £18 or more than the Welsh Office's target figures. Any payment above that figure is the result of the local authorities dunning their own citizens. As a result of the transitional scheme, 324 communities out of 860 in Wales will benefit and 35 out of 37 districts contain communities that will benefit from the relief.
Already community charge bills incorporating this scheme have been sent out. Were the regulations to be defeated, all those authorities and communities involved would have to cancel their current bills and send out higher, and in some cases much higher, fresh bills—at heaven knows what expense—and to the dismay of beneficiaries and local authorities. That, of course, applies to England as well as Wales.
In the Welsh context, it is noticeable that 14 district authorities and two counties have increased budgets by 10 per cent. or less from 1989–90. If they were able—

It being one and a half hours after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question pursuant to Order [23 March]:

The House divided: Ayes 233, Noes 305.

Division No. 141]
[12 midnight


AYES


Abbott, Ms Diane
Bradley, Keith


Adams, Allen (Paisley N)
Bray, Dr Jeremy


Allen, Graham
Brown, Gordon (D'mline E)


Alton, David
Brown, Nicholas (Newcastle E)


Anderson, Donald
Brown, Ron (Edinburgh Leith)


Archer, Rt Hon Peter
Buckley, George J.


Armstrong, Hilary
Caborn, Richard


Ashdown, Rt Hon Paddy
Callaghan, Jim


Ashley, Rt Hon Jack
Campbell, Menzies (Fife NE)


Ashton, Joe
Campbell, Ron (Blyth Valley)


Banks, Tony (Newham NW)
Campbell-Savours, D. N.


Barnes, Harry (Derbyshire NE)
Carlile, Alex (Mont'g)


Barnes, Mrs Rosie (Greenwich)
Cartwright, John


Barron, Kevin
Clark, Dr David (S Shields)


Battle, John
clarke, Tom (Monklands W)


Beckett, Margaret
Clay, Bob


Beith, A. J.
Clelland, David


Bell, Stuart
Clwyd, Mrs Ann


Benn, Rt Hon Tony
Cohen, Harry


Bennett, A. F. (D'nt'n &amp; R'dish)
Cook, Frank (Stockton N)


Bermingham, Gerald
Cook, Robin (Livingston)


Bidwell, Sydney
Corbett, Robin


Blair, Tony
Corbyn, Jeremy


Boateng, Paul
Cousins, Jim


Boyes, Roland
Cox, Tom





Crowther, Stan
Lewis, Terry


Cryer, Bob
Litherland, Robert


Cummings, John
Livingstone, Ken


Cunliffe, Lawrence
Livsey, Richard


Cunningham, Dr John
Lloyd, Tony (Stretford)


Dalyell, Tam
Lofthouse, Geoffrey


Darling, Alistair
Loyden, Eddie


Davies, Rt Hon Denzil (Llanelli)
McAllion, John


Davies, Ron (Caerphilly)
McAvoy, Thomas


Davis, Terry (B'ham Hodge H'l)
McCartney, Ian


Dewar, Donald
Macdonald, Calum A.


Dixon, Don
McFall, John


Dobson, Frank
Mckay, Allen (Barnsley West)


Doran, Frank
McKelvey, William


Duffy, A. E. P.
Maclennan, Robert


Dunnachie, Jimmy
McNamara, Kevin


Dunwoody, Hon Mrs Gwyneth
McWilliam, John


Eadie, Alexander
Madden, Max


Eastham, Ken
Mahon, Mrs Alice


Evans, John (St Helens N)
Marek, Dr John


Ewing, Harry (Falkirk E)
Marshall, Jim (Leicester S)


Ewing, Mrs Margaret (Moray)
Martin, Michael J. (Springburn)


Fatchett, Derek
Martlew, Eric


Faulds, Andrew
Maxton, John


Fearn, Ronald
Maxwell-Hyslop, Robin


Field, Barry (Isle of Wight)
Meacher, Michael


Field, Frank (Birkenhead)
Meale, Alan


Fields, Terry (L'pool B G'n)
Michie, Bill (Sheffield Heeley)


Fisher, Mark
Michie, Mrs Ray (Arg'l &amp; Bute)


Flannery, Martin
Moonie, Dr Lewis


Flynn, Paul
Morgan, Rhodri


Foot, Rt Hon Michael
Morley, Elliot


Foster, Derek
Morris, Rt Hon A. (W'shawe)


Foulkes, George
Morris, Rt Hon J. (Aberavon)


Fraser, John
Mowlam, Marjorie


Fyfe, Maria
Mullin, Chris


Galloway, George
Murphy, Paul


Garrett, John (Norwich South)
Nellist, Dave


George, Bruce
Oakes, Rt Hon Gordon


Godman, Dr Norman A.
O'Brien, William


Gordon, Mildred
O'Neill, Martin


Gould, Bryan
Orme, Rt Hon Stanley


Graham, Thomas
Owen, Rt Hon Dr David


Grant, Bernie (Tottenham)
Patchett, Terry


Griffiths, Nigel (Edinburgh S)
Pendry, Tom


Griffiths, Win (Bridgend)
Pike, Peter L.


Grocott, Bruce
Prescott, John


Hardy, Peter
Primarolo, Dawn


Harman, Ms Harriet
Quin, Ms Joyce


Hattersley, Rt Hon Roy
Radice, Giles


Haynes, Frank
Randall, Stuart


Healey, Rt Hon Denis
Redmond, Martin


Henderson, Doug
Rees, Rt Hon Merlyn


Hinchliffe, David
Richardson, Jo


Hoey, Ms Kate (Vauxhall)
Robertson, George


Hogg, N. (C'nauld &amp; Kilsyth)
Robinson, Peter (Belfast E)


Home Robertson, John
Rogers, Allan


Hood, Jimmy
Rooker, Jeff


Howarth, George (Knowsley N)
Ross, Ernie (Dundee W)


Howell, Rt Hon D. (S'heath)
Rowlands, Ted


Howells, Geraint
Ruddock, Joan


Howells, Dr. Kim (Pontypridd)
Salmond, Alex


Hoyle, Doug
Sedgemore, Brian


Hughes, John (Coventry NE)
Sheerman, Barry


Hughes, Robert (Aberdeen N)
Sheldon, Rt Hon Robert


Hughes, Roy (Newport E)
Shore, Rt Hon Peter


Hughes, Simon (Southwark)
Short, Clare


Illsley, Eric
Skinner, Dennis


Janner, Greville
Smith, Andrew (Oxford E)


Jones, Barry (Alyn &amp; Deeside)
Smith, C. (Isl'ton &amp; F'bury)


Jones, Ieuan (Ynys Môn)
Smith, Rt Hon J. (Monk'ds E)


Jones, Martyn (Clwyd S W)
Smith, J. P. (Vale of Glam)


Kaufman, Rt Hon Gerald
Snape, Peter


Kennedy, Charles
Soley, Clive


Kilfedder, James
Spearing, Nigel


Kinnock, Rt Hon Neil
Stanley, Rt Hon Sir John


Kirkwood, Archy
Steel, Rt Hon Sir David


Lamond, James
Steinberg, Gerry


Leadbitter, Ted
Stott, Roger


Leighton, Ron
Strang, Gavin






Straw, Jack
Williams, Rt Hon Alan


Taylor, Mrs Ann (Dewsbury)
Williams, Alan W. (Carm'then)


Thompson, Jack (Wansbeck)
Wilson, Brian


Turner, Dennis
Winnick, David


Vaz, Keith
Winterton, Nicholas


Wall, Pat
Wise, Mrs Audrey


Wallace, James
Worthington, Tony


Walley, Joan
Wray, Jimmy


Wardell, Gareth (Gower)
Young, David (Bolton SE)


Wareing, Robert N.



Watson, Mike (Glasgow, C)
Tellers for the Ayes:


Welsh, Andrew (Angus E)
Mrs. Llin Golding and


Welsh, Michael (Doncaster N)
Mr. Ray Powell


Wigley, Dafydd





NOES


Aitken, Jonathan
Currie, Mrs Edwina


Alexander, Richard
Curry, David


Alison, Rt Hon Michael
Davies, Q. (Stamf'd &amp; Spald'g)


Allason, Rupert
Davis, David (Boothferry)


Amery, Rt Hon Julian
Day, Stephen


Amess, David
Devlin, Tim


Amos, Alan
Dickens, Geoffrey


Arbuthnot, James
Dorrell, Stephen


Arnold, Jacques (Gravesham)
Douglas-Hamilton, Lord James


Arnold, Tom (Hazel Grove)
Dover, Den


Ashby, David
Dunn, Bob


Aspinwall, Jack
Durant, Tony


Atkins, Robert
Dykes, Hugh


Atkinson, David
Eggar, Tim


Baker, Rt Hon K. (Mole Valley)
Emery, Sir Peter


Baker, Nicholas (Dorset N)
Evans, David (Welwyn Hatf'd)


Baldry, Tony
Evennett, David


Banks, Robert (Harrogate)
Fairbairn, Sir Nicholas


Batiste, Spencer
Fallon, Michael


Bellingham, Henry
Farr, Sir John


Bendall, Vivian
Favell, Tony


Bennett, Nicholas (Pembroke)
Fenner, Dame Peggy


Bevan, David Gilroy
Finsberg, Sir Geoffrey


Bonsor, Sir Nicholas
Fishburn, John Dudley


Boscawen, Hon Robert
Fookes, Dame Janet


Boswell, Tim
Forman, Nigel


Bottomley, Peter
Forsyth, Michael (Stirling)


Bottomley, Mrs Virginia
Forth, Eric


Bowden, A (Brighton K'pto'n)
Fowler, Rt Hon Sir Norman


Bowden, Gerald (Dulwich)
Fox, Sir Marcus


Bowis, John
Franks, Cecil


Braine, Rt Hon Sir Bernard
Freeman, Roger


Brandon-Bravo, Martin
French, Douglas


Brazier, Julian
Fry, Peter


Bright, Graham
Gale, Roger


Brooke, Rt Hon Peter
Gardiner, George


Brown, Michael (Brigg &amp; Cl't's)
Garel-Jones, Tristan


Bruce, Ian (Dorset South)
Glyn, Dr Sir Alan


Budgen, Nicholas
Goodson-Wickes, Dr Charles


Burns, Simon
Gorman, Mrs Teresa


Burt, Alistair
Gorst, John


Butcher, John
Gow, Ian


Butler, Chris
Grant, Sir Anthony (CambsSW)


Butterfill, John
Greenway, Harry (Ealing N)


Carlisle, John, (Luton N)
Greenway, John (Ryedale)


Carlisle, Kenneth (Lincoln)
Gregory, Conal


Carrington, Matthew
Griffiths, Peter (Portsmouth N)


Carttiss, Michael
Grist, Ian


Cash, William
Ground, Patrick


Chalker, Rt Hon Mrs Lynda
Grylls, Michael


Channon, Rt Hon Paul
Hague, William


Chapman, Sydney
Hamilton, Neil (Tatton)


Chope, Christopher
Hanley, Jeremy


Clark, Hon Alan (Plym'th S'n)
Hannam, John


Clark, Dr Michael (Rochford)
Hargreaves, A. (B'ham H'll Gr')


Clark, Sir W. (Croydon S)
Hargreaves, Ken (Hyndburn)


Clarke, Rt Hon K. (Rushcliffe)
Harris, David


Colvin, Michael
Haselhurst, Alan


Conway, Derek
Hawkins, Christopher


Coombs, Anthony (Wyre F'rest)
Hayes, Jerry


Coombs, Simon (Swindon)
Hayward, Robert


Cope, Rt Hon John
Heathcoat-Amory, David


Couchman, James
Hicks, Mrs Maureen (Wolv' NE)


Cran, James
Higgins, Rt Hon Terence L.





Hind, Kenneth
Nicholson, David (Taunton)


Hogg, Hon Douglas (Gr'th'm)
Nicholson, Emma (Devon West)


Holt, Richard
Norris, Steve


Hordern, Sir Peter
Onslow, Rt Hon Cranley


Howard, Rt Hon Michael
Oppenheim, Phillip


Howarth, Alan (Strat'd-on-A)
Page, Richard


Howarth, G. (Cannock &amp; B'wd)
Parkinson, Rt Hon Cecil


Howe, Rt Hon Sir Geoffrey
Patnick, Irvine


Howell, Rt Hon David (G'dford)
Patten, Rt Hon Chris (Bath)


Hughes, Robert G. (Harrow W)
Patten, Rt Hon John


Hunt, David (Wirral W)
Pattie, Rt Hon Sir Geoffrey


Hunt, Sir John (Ravensbourne)
Porter, Barry (Wirral S)


Hunter, Andrew
Porter, David (Waveney)


Hurd, Rt Hon Douglas
Portillo, Michael


Irving, Sir Charles
Powell, William (Corby)


Jack, Michael
Price, Sir David


Jackson, Robert
Raffan, Keith


Janman, Tim
Redwood, John


Jessel, Toby
Renton, Rt Hon Tim


Johnson Smith, Sir Geoffrey
Rhodes James, Robert


Jones, Gwilym (Cardiff N)
Riddick, Graham


Jones, Robert B (Herts W)
Ridley, Rt Hon Nicholas


Jopling, Rt Hon Michael
Ridsdale, Sir Julian


Kellett-Bowman, Dame Elaine
Rifkind, Rt Hon Malcolm


Key, Robert
Roberts, Wyn (Conwy)


King, Roger (B'ham N'thfield)
Roe, Mrs Marion


Kirkhope, Timothy
Rossi, Sir Hugh


Knapman, Roger
Rost, Peter


Knight, Greg (Derby North)
Rowe, Andrew


Knight, Dame Jill (Edgbaston)
Rumbold, Mrs Angela


Knowles, Michael
Ryder, Richard


Lamont, Rt Hon Norman
Sackville, Hon Tom


Lang, Ian
Sainsbury, Hon Tim


Latham, Michael
Sayeed, Jonathan


Lawrence, Ivan
Scott, Rt Hon Nicholas


Leigh, Edward (Gainsbor'gh)
Shaw, David (Dover)


Lennox-Boyd, Hon Mark
Shaw, Sir Giles (Pudsey)


Lilley, Peter
Shaw, Sir Michael (Scarb')


Lloyd, Sir Ian (Havant)
Shelton, Sir William


Lloyd, Peter (Fareham)
Shephard, Mrs G. (Norfolk SW)


Lord, Michael
Shepherd, Colin (Hereford)


Luce, Rt Hon Richard
Shersby, Michael


Lyell, Rt Hon Sir Nicholas
Sims, Roger


Macfarlane, Sir Neil
Skeet, Sir Trevor


MacGregor, Rt Hon John
Smith, Tim (Beaconsfield)


MacKay, Andrew (E Berkshire)
Soames, Hon Nicholas


Maclean, David
Speed, Keith


McLoughlin, Patrick
Spicer, Sir Jim (Dorset W)


McNair-Wilson, Sir Michael
Spicer, Michael (S Worcs)


McNair-Wilson, Sir Patrick
Stanbrook, Ivor


Madel, David
Stern, Michael


Major, Rt Hon John
Stevens, Lewis


Malins, Humfrey
Stewart, Allan (Eastwood)


Mans, Keith
Stewart, Andy (Sherwood)


Maples, John
Stewart, Rt Hon Ian (Herts N)


Marland, Paul
Stokes, Sir John


Marlow, Tony
Stradling Thomas, Sir John


Marshall, John (Hendon S)
Sumberg, David


Marshall, Michael (Arundel)
Summerson, Hugo


Maude, Hon Francis
Tapsell, Sir Peter


Mawhinney, Dr Brian
Taylor, Ian (Esher)


Mayhew, Rt Hon Sir Patrick
Taylor, John M (Solihull)


Mellor, David
Taylor, Teddy (S'end E)


Miller, Sir Hal
Tebbit, Rt Hon Norman


Mills, Iain
Thatcher, Rt Hon Margaret


Mitchell, Andrew (Gedling)
Thompson, D. (Calder Valley)


Mitchell, Sir David
Thompson, Patrick (Norwich N)


Moate, Roger
Thorne, Neil


Montgomery, Sir Fergus
Thurnham, Peter


Moore, Rt Hon John
Townend, John (Bridlington)


Morris, M (N'hampton S)
Townsend, Cyril D. (B'heath)


Morrison, Rt Hon P (Chester)
Tracey, Richard


Moss, Malcolm
Tredinnick, David


Moynihan, Hon Colin
Trippier, David


Neale, Gerrard
Trotter, Neville


Needham, Richard
Twinn, Dr Ian


Nelson, Anthony
Vaughan, Sir Gerard


Neubert, Michael
Viggers, Peter


Newton, Rt Hon Tony
Waddington, Rt Hon David


Nicholls, Patrick
Wakeham, Rt Hon John






Walden, George
Winterton, Mrs Ann


Waller, Gary
Wolfson, Mark


Ward, John
Wood, Timothy


Wardle, Charles (Bexhill)
Woodcock, Dr. Mike


Warren, Kenneth
Yeo, Tim


Watts, John
Younger, Rt Hon George


Wells, Bowen



Wheeler, Sir John
Tellers for the Noes:


Whitney, Ray
Mr. Alastair Goodlad and


Widdecombe, Ann
Mr. David Lightbown


Wiggin, Jerry

Question accordingly negatived.

Motion made, and Question put forthwith,
That an humble Address be presented to Her Majesty, praying that the Personal Community Charge (Relief) (Wales) Regulations 1990 (S.I., 1990, No. 288), dated 16th February 1990, a copy of which was laid before this House on 19th February, be annulled—[Mr. Barry Jones.]

The House divided: Ayes 229, Noes 297.

Division No. 142]
[12.13 am


AYES


Abbott, Ms Diane
Darling, Alistair


Adams, Allen (Paisley N)
Davies, Rt Hon Denzil (Llanelli)


Allen, Graham
Davies, Ron (Caerphilly)


Alton, David
Davis, Terry (B'ham Hodge H'l)


Anderson, Donald
Dewar, Donald


Archer, Rt Hon Peter
Dixon, Don


Armstrong, Hilary
Dobson, Frank


Ashdown, Rt Hon Paddy
Doran, Frank


Ashley, Rt Hon Jack
Duffy, A. E. P.


Ashton, Joe
Dunnachie, Jimmy


Banks, Tony (Newham NW)
Dunwoody, Hon Mrs Gwyneth


Barnes, Harry (Derbyshire NE)
Eadie, Alexander


Barnes, Mrs Rosie (Greenwich)
Eastham, Ken


Barron, Kevin
Evans, John (St Helens N)


Battle, John
Ewing, Harry (Falkirk E)


Beckett, Margaret
Ewing, Mrs Margaret (Moray)


Beith, A. J.
Fatchett, Derek


Bell, Stuart
Faulds, Andrew


Benn, Rt Hon Tony
Fearn, Ronald


Bennett, A. F. (D'nt'n &amp; R'dish)
Field, Frank (Birkenhead)


Bermingham, Gerald
Fields, Terry (L'pool B G'n)


Bidwell, Sydney
Fisher, Mark


Blair, Tony
Flannery, Martin


Boateng, Paul
Flynn, Paul


Boyes, Roland
Foot, Rt Hon Michael


Bradley, Keith
Foster, Derek


Bray, Dr Jeremy
Foulkes, George


Brown, Gordon (D'mline E)
Fraser, John


Brown, Nicholas (Newcastle E)
Fyfe, Maria


Brown, Ron (Edinburgh Leith)
Galloway, George


Buckley, George J.
Garrett, John (Norwich South)


Caborn, Richard
George, Bruce


Callaghan, Jim
Godman, Dr Norman A.


Campbell, Menzies (Fife NE)
Gordon, Mildred


Campbell, Ron (Blyth Valley)
Gould, Bryan


Campbell-Savours, D. N.
Graham, Thomas


Carlile, Alex (Mont'g)
Grant, Bernie (Tottenham)


Cartwright, John
Griffiths, Nigel (Edinburgh S)


Clark, Dr David (S Shields)
Griffiths, Win (Bridgend)


Clarke, Tom (Monklands W)
Grocott, Bruce


Clay, Bob
Hardy, Peter


Clelland, David
Harman, Ms Harriet


Clwyd, Mrs Ann
Hattersley, Rt Hon Roy


Cohen, Harry
Haynes, Frank


Cook, Frank (Stockton N)
Healey, Rt Hon Denis


Cook, Robin (Livingston)
Henderson, Doug


Corbett, Robin
Hinchliffe, David


Corbyn, Jeremy
Hoey, Ms Kate (Vauxhall)


Cousins, Jim
Hogg, N. (C'nauld &amp; Kilsyth)


Cox, Tom
Home Robertson, John


Crowther, Stan
Hood, Jimmy


Cryer, Bob
Howarth, George (Knowsley N)


Cummings, John
Howell, Rt Hon D. (S'heath)


Cunliffe, Lawrence
Howells, Geraint


Cunningham, Dr John
Howells, Dr Kim (Pontypridd)


Dalyell, Tam
Hoyle, Doug





Hughes, John (Coventry NE)
Pendry, Tom


Hughes, Robert (Aberdeen N)
Pike, Peter L.


Hughes, Roy (Newport E)
Prescott, John


Hughes, Simon (Southwark)
Primarolo, Dawn


Illsley, Eric
Quin, Ms Joyce


Janner, Greville
Radice, Giles


Jones, Barry (Alyn &amp; Deeside)
Randall, Stuart


Jones, Ieuan (Ynys Môn)
Redmond, Martin


Jones, Martyn (Clwyd S W)
Rees, Rt Hon Merlyn


Kaufman, Rt Hon Gerald
Richardson, Jo


Kennedy, Charles
Robertson, George


Kilfedder, James
Robinson, Peter (Belfast E)


Kinnock, Rt Hon Neil
Rogers, Allan


Kirkwood, Archy
Rooker, Jeff


Lamond, James
Ross, Ernie (Dundee W)


Leadbitter, Ted
Rowlands, Ted


Leighton, Ron
Ruddock, Joan


Lewis, Terry
Salmond, Alex


Litherland, Robert
Sedgemore, Brian


Livingstone, Ken
Sheerman, Barry


Livsey, Richard
Sheldon, Rt Hon Robert


Lloyd, Tony (Stretford)
Shore, Rt Hon Peter


Lofthouse, Geoffrey
Short, Clare


Loyden, Eddie
Skinner, Dennis


McAllion, John
Smith, Andrew (Oxford E)


McAvoy, Thomas
Smith, C. (Isl'ton &amp; F'bury)


McCartney, Ian
Smith, Rt Hon J. (Monk'ds E)


Macdonald, Calum A.
Smith, J. P. (Vale of Glam)


McFall, John
Snape, Peter


McKay, Allen (Barnsley West)
Soley, Clive


McKelvey, William
Spearing, Nigel


Maclennan, Robert
Steel, Rt Hon Sir David


McNamara, Kevin
Steinberg, Gerry


McWilliam, John
Strang, Gavin


Madden, Max
Straw, Jack


Mahon, Mrs Alice
Taylor, Mrs Ann (Dewsbury)


Marek, Dr John
Thompson, Jack (Wansbeck)


Marshall, Jim (Leicester S)
Turner, Dennis


Martin, Michael J. (Springburn)
Vaz, Keith


Martlew, Eric
Wall, Pat


Maxton, John
Wallace, James


Meacher, Michael
Walley, Joan


Meale, Alan
Wardell, Gareth (Gower)


Michie, Bill (Sheffield Heeley)
Wareing, Robert N.


Michie, Mrs Ray (Arg'l &amp; Bute)
Watson, Mike (Glasgow, C)


Moonie, Dr Lewis
Welsh, Andrew (Angus E)


Morgan, Rhodri
Welsh, Michael (Doncaster N)


Morley, Elliot
Wigley, Dafydd


Morris, Rt Hon A. (W'shawe)
Williams, Rt Hon Alan


Morris, Rt Hon J. (Aberavon)
Williams, Alan W. (Carm'then)


Mowlam, Marjorie
Wilson, Brian


Mullin, Chris
Winnick, David


Murphy, Paul
Wise, Mrs Audrey


Nellist, Dave
Worthington, Tony


Oakes, Rt Hon Gordon
Wray, Jimmy


O'Brien, William
Young, David (Bolton SE)


O'Neill, Martin



Orme, Rt Hon Stanley
Tellers for the Ayes:


Owen, Rt Hon Dr David
Mrs. Win Golding and Mr. Ray Powell


Patchett, Terry





NOES


Aitken, Jonathan
Batiste, Spencer


Alexander, Richard
Bellingham, Henry


Alison, Rt Hon Michael
Bendall, Vivian


Allason, Rupert
Bennett, Nicholas (Pembroke)


Amery, Rt Hon Julian
Bevan, David Gilory


Amess, David
Bonsor, Sir Nicholas


Amos, Alan
Boscawen, Hon Robert


Arbuthnot, James
Boswell, Tim


Arnold, Jacques (Gravesham)
Bottomley, Peter


Arnold, Tom (Hazel Grove)
Bottomley, Mrs Virginia


Ashby, David
Bowden, A (Brighton K'pto'n)


Aspinwall, Jack
Bowden, Gerald (Dulwich)


Atkins, Robert
Bowis, John


Atkinson, David
Braine, Rt Hon Sir Bernard


Baker, Rt Hon K. (Mole Valley)
Brandon-Bravo, Martin


Baker, Nicholas (Dorset N)
Brazier, Julian


Baldry, Tony
Bright, Graham


Banks, Robert (Harrogate)
Brooke, Rt Hon Peter






Brown, Michael (Brigg &amp; Cl't's)
Hargreaves, A. (B'ham H'll Gr')


Bruce, Ian (Dorset South)
Hargreaves, Ken (Hyndburn)


Budgen, Nicholas
Harris, David


Burns, Simon
Haselhurst, Alan


Burt, Alistair
Hawkins, Christopher


Butcher, John
Hayes, Jerry


Butler, Chris
Hayward, Robert


Butterfill, John
Heathcoat-Amory, David


Carlisle, John, (Luton N)
Hicks, Mrs Maureen (Wolv' NE)


Carlisle, Kenneth (Lincoln)
Higgins, Rt Hon Terence L.


Carrington, Matthew
Hind, Kenneth


Carttiss, Michael
Hogg, Hon Douglas (Gr'th'm)


Cash, William
Holt, Richard


Chalker, Rt Hon Mrs Lynda
Hordern, Sir Peter


Channon, Rt Hon Paul
Howard, Rt Hon Michael


Chapman, Sydney
Howarth, Alan (Strat'd-on-A)


Chope, Christopher
Howarth, G. (Cannock &amp; B'wd)


Clark, Hon Alan (Plym'th S'n)
Howe, Rt Hon Sir Geoffrey


Clark, Dr Michael (Rochford)
Howell, Rt Hon David (G'dford)


Clark, Sir W. (Croydon S)
Hughes, Robert G. (Harrow W)


Clarke, Rt Hon K. (Rushcliffe)
Hunt, David (Wirral W)


Colvin, Michael
Hunt, Sir John (Ravensbourne)


Conway, Derek
Hunter, Andrew


Coombs, Anthony (Wyre F'rest)
Hurd, Rt Hon Douglas


Coombs, Simon (Swindon)
Irving, Sir Charles


Cope, Rt Hon John
Jack, Michael


Couchman, James
Jackson, Robert


Cran, James
Janman, Tim


Currie, Mrs Edwina
Jessel, Toby


Curry, David
Johnson Smith, Sir Geoffrey


Davies, Q. (Stamf'd &amp; Spald'g)
Jones, Gwilym (Cardiff N)


Davis, David (Booth ferry)
Jones, Robert B (Herts W)


Day, Stephen
Jopling, Rt Hon Michael


Devlin, Tim
Key, Robert


Dickens, Geoffrey
King, Roger (B'ham N'thfield)


Dorrell, Stephen
Kirkhope, Timothy


Douglas-Hamilton, Lord James
Knapman, Roger


Dover, Den
Knight, Greg (Derby North)


Dunn, Bob
Knight, Dame Jill (Edgbaston)


Durant, Tony
Knowles, Michael


Eggar, Tim
Lamont, Rt Hon Norman


Emery, Sir Peter
Lang, Ian


Evans, David (Welwyn Hatf'd)
Latham, Michael


Evennett, David
Lawrence, Ivan


Fairbairn, Sir Nicholas
Leigh, Edward (Gainsbor'gh)


Fallon, Michael
Lennox-Boyd, Hon Mark


Favell, Tony
Lilley, Peter


Fenner, Dame Peggy
Lloyd, Sir Ian (Havant)


Finsberg, Sir Geoffrey
Lloyd, Peter (Fareham)


Fishburn, John Dudley
Lord, Michael


Fookes, Dame Janet
Luce, Rt Hon Richard


Forman, Nigel
Lyell, Rt Hon Sir Nicholas


Forsyth, Michael (Stirling)
Macfarlane, Sir Neil


Forth, Eric
MacGregor, Rt Hon John


Fowler, Rt Hon Sir Norman
Mackay, Andrew (E Berkshire)


Fox, Sir Marcus
Maclean, David


Franks, Cecil
McLoughlin, Patrick


Freeman, Roger
McNair-Wilson, Sir Michael


French, Douglas
Madel, David


Fry, Peter
Major, Rt Hon John


Gale, Roger
Malins, Humfrey


Gardiner, George
Mans, Keith


Garel-Jones, Tristan
Maples, John


Glyn, Dr Sir Alan
Marland, Paul


Goodson-Wickes, Dr Charles
Marlow, Tony


Gorman, Mrs Teresa
Marshall, John (Hendon S)


Gorst, John
Marshall, Michael (Arundel)


Gow, Ian
Maude, Hon Francis


Grant, Sir Anthony (CambsSW)
Mawhinney, Dr Brian


Greenway, Harry (Ealing N)
Mayhew, Rt Hon Sir Patrick


Greenway, John (Ryedale)
Mellor, David


Gregory, Conal
Miller, Sir Hal


Griffiths, Peter (Portsmouth N)
Mills, Iain


Grist, Ian
Mitchell, Andrew (Gedling)


Ground, Patrick
Mitchell, Sir David


Grylls, Michael
Moate, Roger


Hague, William
Montgomery, Sir Fergus


Hamilton, Neil (Tatton)
Moore, Rt Hon John


Hanley, Jeremy
Morris, M (N'hampton S)


Hannam, John
Morrison, Rt Hon P (Chester)





Moss, Malcolm
Spicer, Michael (S Worcs)


Moynihan, Hon Colin
Stanbrook, Ivor


Neale, Gerrard
Stern, Michael


Needham, Richard
Stevens, Lewis


Nelson, Anthony
Stewart, Allan (Eastwood)


Neubert, Michael
Stewart, Andy (Sherwood)


Newton, Rt Hon Tony
Stewart, Rt Hon Ian (Herts N)


Nicholls, Patrick
Stokes, Sir John


Nicholson, David (Taunton)
Stradling Thomas, Sir John


Nicholson, Emma (Devon West)
Sumberg, David


Norris, Steve
Summerson, Hugo


Onslow, Rt Hon Cranley
Tapsell, Sir Peter


Oppenheim, Phillip
Taylor, Ian (Esher)


Page, Richard
Taylor, John M (Solihull)


Parkinson, Rt Hon Cecil
Taylor, Teddy (S'end E)


Patnick, Irvine
Tebbit, Rt Hon Norman


Patten, Rt Hon Chris (Bath)
Thatcher, Rt Hon Margaret


Patten, Rt Hon John
Thompson, D. (Calder Valley)


Pattie, Rt Hon Sir Geoffrey
Thompson, Patrick (Norwich N)


Porter, Barry (Wirral S)
Thorne, Neil


Porter, David (Waveney)
Thurnham, Peter


Portillo, Michael
Townsend, Cyril D. (B'heath)


Raffan, Keith
Tracey, Richard


Redwood, John
Tredinnick, David


Renton, Rt Hon Tim
Trippier, David


Rhodes James, Robert
Trotter, Neville


Riddick, Graham
Twinn, Dr Ian


Ridley, Rt Hon Nicholas
Vaughan, Sir Gerard


Ridsdale, Sir Julian
Viggers, Peter


Rifkind, Rt Hon Malcolm
Waddington, Rt Hon David


Roberts, Wyn (Conwy)
Wakeham, Rt Hon John


Roe, Mrs Marion
Walden, George


Rossi, Sir Hugh
Waller, Gary


Rowe, Andrew
Ward, John


Rumbold, Mrs Angela
Wardle, Charles (Bexhill)


Ryder, Richard
Warren, Kenneth


Sackville, Hon Tom
Watts, John


Sainsbury, Hon Tim
Wells, Bowen


Sayeed, Jonathan
Wheeler, Sir John


Scott, Rt Hon Nicholas
Whitney, Ray


Shaw, David (Dover)
Widdecombe, Ann


Shaw, Sir Giles (Pudsey)
Wiggin, Jerry


Shaw, Sir Michael (Scarb')
Winterton, Mrs Ann


Shelton, Sir William
Wolfson, Mark


Shephard, Mrs G. (Norfolk SW)
Wood, Timothy


Shepherd, Colin (Hereford)
Woodcock, Dr. Mike


Shersby, Michael
Yeo, Tim


Sims, Roger
Younger, Rt Hon George


Skeet, Sir Trevor



Smith, Tim (Beaconsfield)
Tellers for the Noes:


Soames, Hon Nicholas
Mr. Alastair Goodlad and


Speed, Keith
Mr. David Lightbown.


Spicer, Sir Jim (Dorset W)

Question accordingly negatived.

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &amp;c.).

TERMS AND CONDITIONS OF EMPLOYMENT

That the draft Redundancy Payments (Local Government) (Modification) (Amendment) Order 1990, which was laid before this House on 20th February, be approved.—[Mr. Duran.]

Question agreed to.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &amp;c.).

TOWN AND COUNTRY PLANNING

That the Town and Country Planning (Compensation for Restrictions on Mineral Working) (Amendment) Regulations 1990, dated 22nd February 1990, a copy of which was laid before this House on 1st March, be approved. [Mr. Durant.]

Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith pursuant to Standing Order No. 102(5) (Standing Committees on European Community documents).

ACCOUNTS OF INSURANCE UNDERTAKINGS

That this House takes note of European Community Document No. 9903/89 relating to the accounts of insurance undertakings; and welcomes it as an important step towards the liberalisation of the European insurance market.—[Mr. Durant.]

Question agreed to.

LOCAL GOVERNMENT

Ordered,
That an humble Address be presented to Her Majesty, praying that the Personal Community Charge (Relief) (England) (Amendment) Regulations 1990 (S.I., 1990, No. 402), dated 2nd March 1990, a copy of which was laid before this House on 5th March, be annulled.—[Mr. Durant.]

PETITIONS

M25 (Disturbance Compensation)

Sir Geoffrey Pattie: I beg to present a petition:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The Humble Petition of the residents of Ongar Road, Addlestone, sheweth
That the Government consider the question of compensation awarded through a rate reduction arising from the disturbance caused by the M25. That this reduction should be continued with the introduction of the community charge.
Wherefore your petitioners pray that your honourable House urge the Secretary of State for the Environment to recognise the disturbance from the M25 and continue to allow a rebate in the community charge as for the rates.
And your Petitioners, as in duty bound, will ever pray.
The petition is signed by George Elliott and other residents of Ongar road.

To lie upon the Table.

Human Embryos

Mr. Thomas McAvoy: I should like to present a petition to the House from my constituents:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The humble petition of the parishioners of St. Mark's Church, Fernhill, Rutherglen, sheweth that we affirm that the newly fertilised human embryo is a real, living human being.
The petition welcomes the Warnock report's statement that the embryo of the human species should be afforded protection in law, opposes any practices which discriminate against the embryo, and prays that legislation be enacted which forbids human embryos being used as subjects for research or experiment (unless this is done solely for the benefit of the embryo concerned).
And your petitioners, as in duty bound, will ever pray.
I express my strong support for the petition.

To lie upon the Table.

Cammell Laird

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Lightbown]

Mr. Frank Field: The Defence Select Committee recently published a report on a large subsidy which was recently paid to Harland and Wolff. I am sure that the Minister will be reassured that I have no wish to debate that report in detail, nor do I expect him to reply to me in this debate. As a member of the Select Committee, I would think that that was the wrong procedure. However, I hope that the Minister will allow me to take the salient points from the Select Committee's report so as to build up the case that my hon. Friend, as I shall call him tonight, the Member for Wirral, South (Mr. Porter) wishes to support—the knock-on effect that this has had on Cammell Laird.
According to the Select Committee's report, the story begins in the middle of 1983 when the Ministry decided to replace an old aviation training ship by converting a large merchant vessel. Harland and Wolff and Cammell Laird were asked to submit bids. Although the bids were substantially different, the Ministry did not investigate why they were so different. A contract was awarded to Harland and Wolff in March 1984 for £49 million.
The reason for the haste in making that commitment was that the Government wished to spend that money before the end of the financial year. Neither I nor the hon. Member for Wirral, South complain about that. Cammell Laird once benefited from the need for money to be spent before the end of the financial year. One understands the accounting procedures.
I do not intend to detain the House by listing the reasons why Harland and Wolff was unable to meet the contract for the set price of £49 million. They are set out in the report. The point is that Harland and Wolff was unable to fulfil the contract at that price and there was a dispute between the Ministry and the shipyard. The Ministry offered an additional £5 million, but Harland and Wolff asked for an additional £26 million.
At some stage the Ministry of Defence decided that a rapid settlement was needed not because the end of the financial year was approaching but because the privatisation of Harland and Wolff was on the horizon and very much part of the agenda. I do not wish to probe the political sensitivities of that move. It is not important to the case that I intend to put forward.
What is important is that a £49 million contract ended up as a £71·5 million contract. If Harland and Wolff were the only shipyard in the world, there would be no point in holding this debate, but apart from not being the only shipyard in the world it is not the only shipyard in this country. There is one on the Mersey, in my constituency.
It is wrong for Government spokesmen to say that there was a happy ending to the story. Although it was a happy ending for Harland and Wolff, it was a less than happy ending for Cammell Laird, the other yard that made a bid for that work. Recently, 800 workers at that yard have been told to get on their bikes. That is very serious for them and for the shipyard as a whole.
The Government's decision to place an order that they must have known was underpriced and then to bail out Harland and Wolff in that way has had an important knock-on effect on Cammell Laird which can easily be

explained. The Minister knows as well as every other hon. Member who is participating in the debate that a shipyard is governed by the normal rules of business—that fixed costs have to be spread over the order book. Therefore, every order gained is an order over which the fixed costs can be spread. More orders mean that present production will be at lower average costs, and they allow future work to be bid for at lower average costs.
Since the Government did the deal to stitch up the privatisation package for Harland and Wolff, Cammell Laird has bid for two important orders for type 23 frigates, both of which it failed to secure. No one could say that those bids would have succeeded if the original tender had been successful; all that can be said is that they would have been more successful than they were, because the costs would have been lower. The result of that failure has been the breaking up of a successful work force.
Let me end as I began, by representing the interests of a shipyard whose interests I am proud to represent. It is no ordinary shipyard, as the Minister knows—not only from the visit that he kindly made last year, but from its history. Not so many years ago, a small group of people decided that, with the right hon. Member for Chingford (Mr. Tebbit) as Secretary of State for Trade and Industry, the way in which to get orders out of the Government was to stage a sit-in. The decision was put to three mass meetings in the yard, and was decisively rejected. Another small group then decided that they could get the decision through if they held a ballot in one of the yard's many shops: they obtained a majority, and an official strike was called.
I do not suggest that the yard immediately sprang to defeat that abuse of the democratic process; indeed, if all the workers had shown such apparent bravery, it could almost be said that they could not be described as brave. People are brave because it is difficult to do things, and it was difficult for the men and women in that yard to turn their backs on what they had thought to be proper, traditional trade union practice—such as the rule that picket lines should not be crossed in the event of an official strike—by holding a vote outside the picket line and returning to work. But they did that, and the yard survived.
The Wirral Members have been at pains to put to the workers—men and women, management and employees alike; we make no distinction, because this is a yard that works—that, although they have acted so courageously, they cannot expect special treatment from the Government, and orders will be placed on the basis of fair competition. I disagree with Government policy in that I believe that when industry is becoming more efficient it needs incentives to take the next step, and the Government perhaps expect it to take that step too quickly; nevertheless, that is the line that we have sold. However, on our recent visit to the yard—after the publication of the report—we were asked, rightly, how the preaching of hon. Members that the Government placed orders on the basis of fair competition could be justified through the Select Committee's findings.
Do not the Government owe a debt to Cammell Laird? Their policy of fair competition has not been fully implemented throughout all shipyards. There has been a "noble exception"—noble, that is, if one represents Harland and Wolff; far less noble if one represents Cammell Laird, because Cammell Laird lost out. I have already explained to the Minister about the likely


knock-on effect. Cammell Laird now faces redundancies. I hope that we shall hear about the programme of work that is coming up—a programme that the yard was told must be won on the basis of fair competition. We want a Government guarantee that there will indeed be fair competition. We should also like the Minister's comments on whether the Government are not now in the debt of Cammell Laird, which it has damaged severely in its attempt to ensure the privatisation of Harland and Wolff.
The work force at Cammell Laird is not asking for special treatment for turning back those militants who were out to destroy our yard; it is not asking for special treatment for crossing the picket line and going into work, although many people were beaten up by the thugs on the picket line. The women who work in that yard are not asking for special treatment for undergoing all the verbal sexual abuse from rent-a-gang on that picket line to keep the shipyard open. They are asking—and expect from the Government—special treatment in the next round of orders, and we hope that the Minister has something to announce this evening.
I now invite the hon. Member for Wirral, South to join in the debate.

Mr. Barry Porter: That invitation is gratefully accepted. First, I always support my own Member of Parliament, the hon. Member for Birkenhead (Mr. Field), so far as I can and when he is not making party political points—and he rarely does that. Secondly, it is not unknown that I take a great interest in the affairs of Northern Ireland. I am a member of the Trade and Industry Select Committee which visited Harland and Wolff prior to privatisation and played some part in persuading the Government—if persuasion were needed—that certain moneys should be paid prior to that privatisation. I make no complaint about that. It was entirely appropriate that those moneys should be paid and that the yard should be privatised.
One of the reasons why I take an interest in the affairs of Northern Ireland is that I believe in the union of the United Kingdom and that all its parts should be treated equally. I know that the Province has particular problems and that there are particular reasons why it should be treated differently, but that should not be so differently that other parts of the United Kingdom are put at a disadvantage.
We all know why the money was given to Harland and Wolff and nobody complained about that, but, as my own Member of Parliament said, Cammell Laird should not be placed at a disadvantage, for the reasons that the hon. Gentleman gave. The work force and management have done everything that the hon. Gentleman described. They went through an enormously difficult period, they crossed vicious picket lines and did everything that workers on Merseyside are supposed not to do. The Government should bear in mind what they did for Harland and Wolff and what the workers and management of Cammell Laird did for themselves. We do not ask for special treatment; we ask for parity and equality and that is not much to ask in the circumstances.

The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Michael Neubert): First, I congratulate the hon. Member for Birkenhead (Mr. Field) on securing the Adjournment debate as it yet again testifies to his tireless concern for his constituents who work in the Cammell Laird shipyard at Birkenhead. Those workers at the yard will also be grateful for the intervention of my hon. Friend the Member for Wirral, South (Mr. Porter), who takes a close, consistent and informed interest in these matters.
I hope that the hon. Member for Birkenhead will forgive me if I do not follow his argument about what the position and viability of Cammell's would now be if, in 1984, the yard had won the contract for the aviation training ship. While his reasoning undoubtedly seems logical, it is none the less hypothetical. Furthermore, I doubt whether the outcome of a single competition would have had quite the influence that the hon. Gentleman believes and whether it can be blamed for as much as he has claimed. I was very heartened to see, when I visited Cammell Laird in his company last autumn, the spirit of co-operation and partnership that has now grown up between work force and management.
I am grateful that the hon. Gentleman does not expect me to anticipate now the formal response that the Government have yet to give to the Defence Committee's report on the supplementary estimate that referred to the payment that was made to Harland and Wolff plc in settlement of the outstanding claim on the aviation training ship prior to the privatisation of that yard last year. As the hon. Gentleman, from his experience on the Select Committee, has acknowledged, that formal Government response is being prepared, and will be issued in the usual way. On that aspect, therefore, I can do more than rehearse the facts as the Ministry of Defence witnesses presented them to the Committee in the published evidence. Having done that, which I shall do on the basis of the memorandum submitted to the Committee, which is published on pages 25 and 26 of its report, I shall, if I have time, look to the future of Cammell Laird.
The history is significantly different from the version presented tonight by the hon. Member for Birkenhead. The background is as follows. In 1984, a replacement was needed for the aviation training ship then in service with the Royal Navy, RFA Engadine. The vessel was near the end of her useful life, was too small to operate modern anti-submarine helicopters, and had severe limitations for deep-water operations in bad weather. Our requirement for the replacement vessel was that it should have a larger flight deck than Engadine, be able to operate six Sea King helicopters—three of them simultaneously—and be able to operate in motion in all but the most severe weather. We therefore needed command and control facilities for operating helicopters safely. These facilities, together with others, such as a self-defence system, an action information organisation and communications, were collectively known as the weapon system. This is important to the later stages in the story.
Vickers Shipbuilding and Engineering Ltd. undertook a concept study for us, and we decided that it would be feasible to meet the requirement by converting a merchant vessel. As the ship had to be able to operate six Sea King helicopters, as well as ferrying 12 Sea Harrier aircraft, a


vessel of some 15,000 tonnes was needed. VSEL identified three ships that might be suitable for conversion, including the Contender Bezant, a vessel built in Italy in 1981. We invited firm price bids covering two options—the purchase and conversion of an existing vessel, and a new build—so that we could consider and evaluate the cost-effectiveness of both.
Tenders were submitted by Harland and Wolff plc and by Cammell Laird. As Cammell Laird was then part of the nationalised British Shipbuilders, both yards were in the public sector and were thus on an equal footing. Both companies proposed to buy and convert Contender Bezant, and we concluded that the Harland and Wolff proposal was the more cost-effective way of meeting the requirement. We accordingly placed a firm price contract on Harland and Wolff in March 1984 to buy and convert Contender Bezant at a cost of some £49 million. Harland and Wolff bought the ship later that month and began work soon after.
For the weapon system, we produced a cardinal point specification in April 1984, and Harland and Wolff ran a subcontract competition, which Racal Marine Systems won. Harland's placed the contract on that company for the ship weapon system authority in December 1984. It was thus identified as the prime contractor for both the ship and its weapon system. This change extended the build period of the vessel by nine months and raised the contract price by some £11 million. Other approved alterations, worth some £3 million, brought the final price to £63 million, with a contract acceptance date of December 1986.
Converting Contender Bezant was a major task. It involved stripping out and refurbishing and extending many of her systems, as well as major changes to her structure to change her from a roll on-roll off container ship to one with a flight deck, hangar and the services needed for helicopter operations. Harland and Wolff accepted liability for any consequential work arising from her condition. Much rectification work turned out to be needed, including major refurbishment of the main engines. The ship was eventually accepted into service as RFA Argus in March 1988, some 14 months later than the revised contract acceptance date. She was well finished and fully meets the Royal Navy's requirement. Argus became fully operational with commander in chief fleet in January 1989 and has since then been available for flying training operations. Argus is a very good ship.
In February 1987, Harland and Wolff submitted an interim claim for reimbursement of some £26 million. It claimed that those were extra costs incurred up to December 1986 for reasons that it alleged were the Ministry of Defence's responsibility. We prepared a detailed rebuttal of the claim. After inconclusive discussions, the company filed a final claim for £45·3 million in August 1988. In general, the company claimed that this represented extra spending that it had to make because of actions by the Ministry of Defence. We recognised that a small part of the delay and dislocation and extra cost resulted from finalising certain requirements for communications equipment, but not to the extent that could justify the sum claimed. We also held that the claim was not supported by factual evidence, as required by the contract.
While that large and complex claim was being considered, proposals for privatising Harland and Wolff began to emerge. The Government regarded it as a matter of urgency to achieve a viable private sector solution, and one of the many issues that it was felt important to resolve before the transfer of the business to the private sector was the outstanding claim on the aviation training ship. The Ministry of Defence had a particular interest in the successful privatisation of Harland and Wolff because the firm was the prime contractor for the design of the auxiliary oiler replenishment vessel and is now building the first of class, RFA Fort Victoria. As outlined in the Select Committee's report, we considered it right, taking into account the wider circumstances of the privatisation and the need to safeguard the AOR programme, to make a settlement of the claim. We finally settled on a figure of £22·5 million to be paid to Harland and Wolff plc. That was entirely without prejudice to our legal position and without admission of liability. That payment of £22·5 million appeared in the supplementary estimate, into which the Select Committee inquired.
It is clear from that account that the £22·5 million payment is not a subsidy to Harland and Wolff and it certainly has no bearing on the original competition some six years ago. The settlement of £22·5 million was made with the public sector Harland and Wolff plc to clear the way for privatisation and will be used by that company to repay grants from the Northern Ireland Department of Economic Development. It is therefore not funding for the private sector firm Harland and Wolff Shipbuilding and Heavy Industry. While it is possible to argue, as the hon. Member for Birkenhead has, that, had Cammell Laird won the ATS competition, it would not have made the same claims on the Ministry of Defence in respect of the ATS, it is equally possible that it would have, or that Cammell Laird would have made claims that Harland's did not. It is all quite hypothetical.

Mr. Barry Porter: I am sorry to interrupt my hon. Friend, and I am delighted that he is reading the brief from the Ministry so splendidly. It is the perceived view that Harland and Wolff has been treated more generously by the Government than other shipyards, including Cammell Laird. Does my hon. Friend agree that that is a fact? The hon. Member for Birkenhead (Mr. Field) and I do not object to that; we are saying that Cammell Laird deserves the same treatment.

Mr. Neubert: I do not dispute that it may be the perceived view, but I hope that my hon. Friend will ensure that it is not taken as a fact.
What is not hypothetical is that the Ministry is not subsidising Harland and Wolff. The contract for RFA Fort Victoria was won competitively and was carefully scrutinised by consultants to ensure that it was unsubsidised. When the yard was privatised, the contract was totally assigned by the public sector Harland and Wolff plc to the private sector Harland and Wolff Shipbuilding and Heavy Industry, and there was no relaxation in the terms of that contract. The ATS contract was won by Harland and Wolff in competition at a price that the MOD considered at the time, and still considers, to have been realistic. Although, in the event, costs did overrun on the aviation training ship, there was no reason at the time to believe that the Harland's tender was unrealistic. I have explained the background against which


some costs were incurred. The Northern Ireland Department of Economic Development was assured by Harland and Wolff that the tender was on a full-cost basis including profit, and no losses were expected on the contract.
I now turn to the prospects for Cammell Laird. I should first confirm that our procurement policy for warships, as for all other equipment, is founded upon value for money and competition. Commercially competitive bids will win our work. Cammell Laird should, if it wishes, be able to bid for a wide range of MOD work—major surface vessels and conventionally-powered submarines in particular. As I said during the debate on the Royal Navy on 5 February, we have plans to run competitions for our requirements in several categories, and we would expect Cammell Laird, as part of the VSEL group, with its combination of design ability and physical capacity, to be able to be among the competing firms.
The redundancies that the yard has recently announced are certainly to be regretted, but I must stress that employment levels at defence contractors are a matter for them and not for the MOD or, for that matter, of any other Government Department. Equally, it is not for me to advise the warship yards on their commercial strategy, but we would always welcome diversification by defence contractors into areas of civil work. Not only does that allow the best use to be made of defence-related technology, but it broadens the customer base of our suppliers, so strengthening their ability to undertake our work cost effectively. So I am pleased that Cammell Laird is actively pursuing some merchant order prospects, and I wish it every success in those efforts.
Although I do not wish to trespass on the territory of my hon. Friends the Minister for Industry and the Under-Secretary of State for Northern Ireland, my hon.

Friend the Member for Wiltshire, North (Mr. Needham), I can assure the House that the Government will not provide any special support to the privatised Harland and Wolff beyond the terms of the privatisation package, apart from intervention fund aid on merchant contracts and other grants normally available to other private sector companies in Northern Ireland. The Government have given no guarantees about future levels of employment at Harland and Wolff. I can appreciate that the hon. Member for Birkenhead, and even perhaps my hon. Friend the Member for Wirral, South, who is well informed about Northern Ireland matters, may find Harland's continued access to intervention fund aid unfair.

Mr. Frank Field: indicated dissent.

Mr. Neubert: However, it is not and I am glad that the hon. Member for Birkenhead agrees. He will recall that the restructuring of British Shipbuilders in 1985 provided that yards designated for privatisation as warship yards would not be eligible for intervention fund support. It was on that basis that Cammell Laird was privatised and the buyers knew this. But Harland and Wolff was privatised as a merchant yard, and it is not able to compete with the warship yards for front-line ships, such as frigates and submarines, even though it can build support vessels such as the AOR.
Cammell Laird has a future, despite the recent redundancies, but that future is wholly in the hands of the firm itself, not of the Government. The future of Cammell Laird lies, as the hon. Member for Birkenhead said, in the continuing drive for efficiency to which management and work force are both committed. That is to their credit, and I wish them well.

Question put and agreed to.

Adjourned accordingly at two minutes to One o'clock.